DEF 14A 1 d683591ddef14a.htm DEF 14A DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.      )

Filed by the Registrant x                            Filed by a Party other than the Registrant ¨

Check the appropriate box:

 

¨ Preliminary Proxy Statement

 

¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

x Definitive Proxy Statement

 

¨ Definitive Additional Materials

 

¨ Soliciting Material Pursuant to §240.14a-12

TIBCO Software Inc.

 

(Name of Registrant as Specified In Its Charter)

 

  

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

x No fee required.

 

¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

  (1) Title of each class of securities to which the transaction applies:

 

  

 

  (2) Aggregate number of securities to which the transaction applies:

 

  

 

  (3) Per unit price or other underlying value of the transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

  

 

  (4) Proposed maximum aggregate value of the transaction:

 

  

 

  (5) Total fee paid:

 

  

 

 

¨ Fee paid previously with preliminary materials.

 

¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

  (1) Amount Previously Paid:

 

  

 

  (2) Form, Schedule or Registration Statement No.:

 

  

 

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  (4) Date Filed:

 

  

 


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LOGO

TIBCO Software Inc.

3303 Hillview Avenue

Palo Alto, CA 94304

March 3, 2014

Dear Stockholders:

You are cordially invited to attend the annual meeting of stockholders of TIBCO Software Inc. on Thursday, April 3, 2014, at 10:00 a.m., Pacific Time. The meeting will be held at our headquarters located at 3303 Hillview Avenue, Palo Alto, California.

The matters to be acted upon are described in the accompanying Notice of Annual Meeting and Proxy Statement.

Your vote is very important. Whether or not you plan to attend the annual meeting, we urge you to vote and submit your proxy by telephone, the Internet or by mail in order to ensure the presence of a quorum. If you attend the meeting, you may, of course, revoke your proxy and vote your shares in person. If you hold your shares through an account with a brokerage firm, bank or other nominee, please follow the instructions you receive from them to vote your shares.

We look forward to seeing you at the meeting.

 

Sincerely,
LOGO
Vivek Y. Ranadivé
Chief Executive Officer and Chairman of the Board


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TIBCO Software Inc.

3303 Hillview Avenue

Palo Alto, CA 94304

 

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

APRIL 3, 2014

 

 

To the Stockholders of TIBCO Software Inc.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of TIBCO Software Inc., a Delaware corporation, will be held on Thursday, April 3, 2014, at 10:00 a.m., Pacific time, at our headquarters located at 3303 Hillview Avenue, Palo Alto, California, for the following purposes:

 

  1. To elect six directors to serve until our next annual meeting of stockholders or until their successors are duly elected and qualified;

 

  2. To approve an amendment and restatement to our 2008 Equity Incentive Plan;

 

  3. To hold an advisory vote on the compensation of our Named Executive Officers;

 

  4. To ratify the appointment of PricewaterhouseCoopers LLP as our independent auditors for the fiscal year ending November 30, 2014; and

 

  5. To transact such other business as may properly come before the meeting.

Only stockholders of record at the close of business on February 7, 2014, are entitled to notice of, and to vote at, the Annual Meeting. For ten days prior to the meeting, a complete list of stockholders entitled to vote at the meeting will be available for examination by any stockholder, for any purpose relating to the meeting, during ordinary business hours at our headquarters at the above address.

 

By Order of the Board of Directors,
LOGO
William R. Hughes
Secretary

Palo Alto, California

March 3, 2014

 

 

YOUR VOTE IS IMPORTANT

 

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, WE ENCOURAGE YOU TO VOTE AND SUBMIT YOUR PROXY BY TELEPHONE, THE INTERNET OR BY MAIL. FOR ADDITIONAL INSTRUCTIONS ON VOTING BY TELEPHONE OR THE INTERNET, PLEASE REFER TO YOUR PROXY CARD. TO VOTE AND SUBMIT YOUR PROXY BY MAIL, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY, OF COURSE, REVOKE YOUR PROXY AND VOTE IN PERSON. IF YOU HOLD YOUR SHARES THROUGH AN ACCOUNT WITH A BROKERAGE FIRM, BANK OR OTHER NOMINEE, PLEASE FOLLOW THE INSTRUCTIONS YOU RECEIVE FROM THEM TO VOTE YOUR SHARES.

 


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ELECTRONIC DELIVERY OF PROXY MATERIALS

 

We are pleased to offer to our stockholders the benefits and convenience of electronic delivery of annual meeting materials, including email delivery of future proxy statements, annual reports and related materials and on-line stockholder voting. If a broker or other nominee holds your shares and you would like to sign-up for electronic delivery, please visit “Proxy Information” on our website at http://www.tibco.com under “About Us—Investor Information” to enroll. Your electronic delivery enrollment will be effective until you cancel it. We encourage you to conserve natural resources, as well as help us reduce printing and mailing costs, by signing up to receive future proxy mailings by email.

 


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TABLE OF CONTENTS

 

     Page  

Proxy Statement for 2014 Annual Meeting of Stockholders

     1   

Voting Rights

     1   

How to Vote Your Shares

     1   

Voting of Proxies

     2   

Revocability of Proxies

     2   

Votes Required to Approve Matters Presented at the Annual Meeting

     2   

Board Voting Recommendations

     3   

Quorum

     3   

Solicitation of Proxies

     3   

Attending the Annual Meeting in Person

     3   

Availability of Proxy Statement and Annual Report on Form 10-K

     4   

Board of Directors

     5   

General

     5   

Director Independence

     5   

Board Leadership Structure and Presiding Director

     5   

Board of Director’s Role in Risk Oversight

     6   

Corporate Governance

     6   

Relationships Among Directors, Executive Officers and Director Nominees

     6   

Stockholder Communication with the Board

     6   

Compensation Committee Interlocks and Insider Participation

     7   

Board Committees

     7   

Director Nomination Process

     8   

Proposal One: Election of Directors

     10   

Nominees

     10   

Director Compensation

     12   

Fiscal Year 2013 Director Compensation

     13   

Director Stock Ownership Guidelines

     13   

Proposal Two: Approval of An Amendment and Restatement to our 2008 Equity Incentive Plan

     14   

Introduction

     14   

Summary of Our Existing Equity Plans

     15   

Performance-Based Restricted Stock Unit Awards

     16   

Summary of the Plan

     17   

Awards Granted to Certain Individuals and Groups

     21   

Summary of U.S. Federal Income Tax Consequences

     22   

Other Information

     24   

Proposal Three: Advisory Vote on the Compensation of our Named Executive Officers

     25   

Audit Committee Report

     27   

Proposal Four: Ratification of Appointment of Independent Auditors

     28   

Fees Paid to the Independent Auditors

     28   

Audit Committee Pre-Approval of Audit and Non-Audit Services of the Independent Auditors

     28   

Security Ownership of Certain Beneficial Owners and Management

     30   

Compensation Discussion and Analysis

     33   

Executive Summary

     33   

Compensation Committee Responsibilities and Authority

     39   

Compensation Philosophy and Objectives

     40   

Roles of the Chief Executive Officer and the Compensation Consultant

     41   

Peer Group Selection

     41   

Stockholder Vote

     42   

Components of Executive Compensation

     42   

 

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TABLE OF CONTENTS

(continued)

 

     Page  

Fiscal Year 2013 Executive Compensation

     46   

Compensation Policies and Practices

     51   

Compensation Committee Report

     53   

Risk Assessment of Compensation Plans

     54   

Executive Compensation

     55   

Summary Compensation Table

     55   

Grants of Plan-Based Awards in Fiscal Year 2013

     57   

Outstanding Equity Awards at Fiscal Year-End 2013

     59   

Option Exercises and Stock Vested at Fiscal Year-End 2013

     61   

Severance and Change in Control Arrangements

     61   

Equity Compensation Plan Information

     66   

Related Party Transactions

     67   

Related Party Transactions Policy and Procedure

     67   

Related Party Transaction

     67   

Other Matters

     68   

Section 16(a) Beneficial Ownership Reporting Compliance

     68   

Delivery of Documents to Stockholders Sharing an Address

     68   

Stockholder Proposals to be Presented at Next Annual Meeting

     68   

Transaction of Other Business

     68   

 

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TIBCO Software Inc.

3303 Hillview Avenue

Palo Alto, CA 94304

 

 

PROXY STATEMENT FOR 2014 ANNUAL MEETING OF STOCKHOLDERS

 

 

This Proxy Statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors of TIBCO Software Inc., a Delaware corporation, for use at the Annual Meeting of Stockholders to be held on April 3, 2014, at 10:00 a.m., Pacific time, or at any adjournment or postponement thereof, for the purposes set forth herein and in the accompanying Notice of Annual Meeting.

The Annual Meeting will be held at our headquarters located at 3303 Hillview Avenue, Palo Alto, California. This Proxy Statement and accompanying proxy card will be mailed on or about March 7, 2014, to all stockholders entitled to vote at the Annual Meeting.

As used in this Proxy Statement, “we,” “us,” “our,” “TIBCO” or the “Company” refers to TIBCO Software Inc.

Voting Rights

Only stockholders of record at the close of business on February 7, 2014, the record date, are entitled to notice of and to vote at the Annual Meeting and any adjournment or postponement thereof. At the close of business on February 7, 2014, we had 161,820,477 shares of common stock outstanding and no shares of preferred stock outstanding.

Each stockholder of record is entitled to one vote for each share of common stock held on the record date on all matters. There is no cumulative voting in the election of directors.

How to Vote Your Shares

YOUR VOTE IS IMPORTANT. Your shares can be voted at the Annual Meeting only if you are present in person or represented by proxy. Whether or not you expect to attend the meeting, please take the time to vote your proxy.

Stockholders of record, or “registered stockholders,” can vote:

 

By Telephone:    Call the toll-free number indicated on the enclosed proxy card and follow the recorded instructions.
By Internet:    Go to the website indicated on the enclosed proxy card and follow the instructions provided.
By Mail:    Mark your vote, date, sign and return the enclosed proxy card in the postage-paid return envelope provided.

If your shares are held beneficially in “street” name through a nominee such as a brokerage firm, financial institution or other holder of record, your shares must be voted through that firm, institution or holder. You may provide your voting instructions to your nominee by telephone or Internet, as well as by mail, if your brokerage firm or financial institution offers such voting alternatives. Please follow the specific instructions provided by your nominee with your proxy materials.

If you are a stockholder of record and you do not cast your vote, no votes will be cast on your behalf on any of the items of business at the Annual Meeting.

 

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Even if you have given your proxy, you still may vote in person if you attend the meeting. Please note, however, that if your shares are held beneficially through a broker, bank or other nominee and you wish to vote at the meeting, you must obtain a proxy issued in your name from the record holder.

Voting of Proxies

Stockholders of Record.    All shares represented by a valid proxy received prior to the meeting will be voted, and, if you provide specific instructions, your shares will be voted as you instruct. If you properly sign your proxy card with no further instructions and it is timely received by us, your shares will be voted:

 

  ·  

FOR each of the nominees for the Board of Directors (Proposal 1);

 

  ·  

FOR the approval of an amendment and restatement to the 2008 Equity Incentive Plan (Proposal 2);

 

  ·  

FOR the approval, on an advisory basis, of the compensation of our Named Executive Officers (Proposal 3);

 

  ·  

FOR the ratification of PricewaterhouseCoopers LLP as our independent auditors for the fiscal year ending November 30, 2014 (Proposal 4); and

 

  ·  

In the discretion of the proxy holders with respect to any other matters that properly come before the meeting.

Beneficial Owners.    If you hold your shares in street name and you do not provide the broker or other nominee that holds your shares with voting instructions, the broker or nominee will determine if it has the discretionary authority to vote on the particular matter. Under the applicable rules, brokers and other nominees have the discretion to vote on routine matters such as Proposal 4, but do not have the discretion to vote on non-routine matters such as Proposals 1, 2 and 3. Thus, if you hold your shares in street name and you do not instruct your broker or nominee how to vote on Proposals 1, 2 or 3, no votes will be cast on your behalf for such proposals and, therefore, there may be broker non-votes on those proposals. Your broker or nominee will, however, continue to have discretion to vote any uninstructed shares on Proposal 4, as that proposal is considered a routine matter under applicable rules. Therefore, no broker non-votes are expected to exist in connection with Proposal 4.

Revocability of Proxies

You may revoke or change a previously delivered proxy at any time before the meeting by delivering a written notice of revocation or another proxy with a later date through the Internet, by telephone or in writing to our Corporate Secretary at our headquarters at 3303 Hillview Avenue, Palo Alto, California 94304. You may also revoke your proxy by attending the meeting and voting in person, although attendance at the meeting will not, by itself, revoke a proxy.

Votes Required to Approve Matters Presented at the Annual Meeting

The required vote varies by proposal as follows:

 

  ·  

The six nominees receiving the highest number of affirmative votes of shares of common stock present at the Annual Meeting, either in person or by proxy, will be elected as directors to serve until our next annual meeting of stockholders or until their successors are duly elected and qualified.

 

  ·  

The amendment and restatement to the 2008 Equity Incentive Plan may be approved by the affirmative vote of a majority of the votes cast.

 

  ·  

The advisory vote on our executive compensation may be approved by the affirmative vote of a majority of the votes cast.

 

  ·  

Ratification of the selection of PricewaterhouseCoopers LLP as our independent auditors may be approved by the affirmative vote of the majority of the votes cast.

 

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If your shares are registered in the name of a bank, brokerage firm or other nominee and you do not provide your broker or nominee with voting instructions, your shares may constitute “broker non-votes.” Generally, broker non-votes occur on certain non-routine matters when a broker is not permitted to vote on that matter without specific instructions from the beneficial owner and instructions are not given. In tabulating the voting result for any particular proposal, shares that constitute broker non-votes are not considered entitled to vote on that proposal. Thus, broker non-votes will not affect the outcome of any matter being voted on at the Annual Meeting. For Proposals 2, 3 and 4, abstentions have the same effect as a vote against the matter.

Board Voting Recommendations

The Board of Directors unanimously recommends that you vote your shares as follows:

 

  ·  

FOR each of the nominees to the Board of Directors (Proposal 1);

 

  ·  

FOR the approval of an amendment and restatement to the 2008 Equity Incentive Plan (Proposal 2);

 

  ·  

FOR the approval, on an advisory basis, of the compensation of our Named Executive Officers (Proposal 3); and

 

  ·  

FOR ratification of the appointment of PricewaterhouseCoopers LLP as our independent auditors for the fiscal year ending November 30, 2014 (Proposal 4).

Quorum

The presence, in person or by proxy, of at least a majority of the shares outstanding on the record date will constitute a quorum. Abstentions and broker non-votes, and, with respect to the election of directors, “withhold” votes, are counted for the purpose of determining the presence of a quorum.

Solicitation of Proxies

We will bear the cost of solicitation of proxies, including preparation, assembly, printing and mailing of this Proxy Statement, the proxy card and any additional information furnished to stockholders. Copies of solicitation materials will be furnished to banks, brokerage houses, fiduciaries and custodians holding in their names shares of common stock beneficially owned by others to forward to such beneficial owners. We will reimburse persons representing beneficial owners of common stock for their costs of forwarding solicitation materials to such beneficial owners. Original solicitation of proxies by mail may be supplemented by telephone, telegram, Internet or personal solicitation by our directors, officers or other regular employees. No additional compensation will be paid to these individuals for such services. We intend to use the services of Innisfree M&A Incorporated, a proxy solicitation firm, in connection with the solicitation of proxies. We will pay Innisfree a fee of $15,000 for these services and will reimburse their out-of-pocket expenses.

Attending the Annual Meeting in Person

If you wish to attend the Annual Meeting in person you will be required to present the following:

All stockholders and valid proxy holders.    A valid form of government-issued photo identification, such as a driver’s license. If you are representing an entity that is a stockholder you must provide evidence of your authority to represent that entity at the meeting.

Holders of record.    The top half of the proxy card indicating the holder of record (whose name and stock ownership may be verified against our list of registered stockholders).

Holders in street name.    Proof of ownership. A brokerage statement which demonstrates stock ownership as of the record date, February 7, 2014, or a letter from your bank or broker indicating that you held our common stock as of such record date are examples of proof of ownership. If you want to vote your common stock held in

 

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street name in person, you must also provide a written legal proxy in your name from the broker, bank, or other nominee that holds your shares.

Valid proxy holders for holders of record.    A written legal proxy to you signed by the holder of record (whose name and stock ownership may be verified against our list of registered stockholders), and proof of ownership by the holder of record as of the record date, February 7, 2014 (see “Holders of record” above).

Valid proxy holders for holders in street name.    A written legal proxy from the brokerage firm or bank holding the shares to the street name holder that is assignable and a written legal proxy to you signed by the street name holder, together with a brokerage statement or letter from the bank or broker indicating that the holder in street name held our common stock as of the record date, February 7, 2014.

Guests.    Admission of persons to the meeting who are not stockholders is subject to space limitations and to the sole discretion of management.

If you do not provide photo identification and comply with the other provisions outlined above, you will not be admitted to the Annual Meeting.

Availability of Proxy Statement and Annual Report on Form 10-K

Our Proxy Statement and Annual Report on Form 10-K for the fiscal year ended November 30, 2013 are available on our website at http://www.tibco.com under “About Us—Investor Information—Proxy Information.” We have provided herewith, to each stockholder of record as of February 7, 2014, a copy of our Consolidated Financial Statements and related information included with our Annual Report on Form 10-K for fiscal year 2013. We will mail without charge to any stockholder, upon written request, a copy of our Annual Report on Form 10-K for fiscal year 2013, including the Consolidated Financial Statements, schedules and list of exhibits, and any particular exhibit specifically requested. Requests should be sent to: TIBCO Software Inc., 3303 Hillview Avenue, Palo Alto, California 94304, Attention: Investor Relations.

 

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BOARD OF DIRECTORS

General

The Board of Directors oversees and provides policy guidance on the business and affairs of TIBCO. Our Board of Directors is currently comprised of seven members. On February 27, 2014, we increased our Board of Directors to seven members and appointed David West to the Board. At that time, Dr. Narendra Gupta advised that he would not stand for reelection at the 2014 Annual Meeting and, as such, the size of the Board of Directors will be reduced back to six members on the date of the Annual Meeting.

The Board of Directors held a total of eight meetings during fiscal year 2013. During fiscal year 2013, each of our directors attended at least 75 percent of the aggregate of: (i) the total number of meetings of the Board of Directors; and (ii) the total number of meetings held by all committees on which he or she served.

Although we do not have a formal policy regarding attendance by members of the Board of Directors at annual meetings, we encourage directors to attend and historically most have done so. All of our directors attended the 2013 Annual Meeting.

Director Independence

Our Board of Directors has determined that each of our directors, other than Mr. Ranadivé, is “independent” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the criteria established by The NASDAQ Stock Market. The independent members of the Board of Directors hold executive sessions at every regularly scheduled meeting of the Board. During fiscal year 2013, the independent directors held four executive sessions.

Board Leadership Structure and Presiding Director

We do not have a fixed policy on whether the roles of Chairman of the Board and Chief Executive Officer should be separate or combined. We based this on our beliefs of our best interests and the best interests of our stockholders under the circumstances existing at the time. Currently, Mr. Ranadivé serves as both our Chief Executive Officer and our Chairman of the Board. Our Board of Directors believes that the current Board leadership structure, coupled with a strong emphasis on Board independence, provides effective independent oversight of management while allowing both the Board of Directors and management to benefit from Mr. Ranadivé’s crucial leadership and experience in our business and industry. Serving as both our Chairman of the Board and Chief Executive Officer since our inception in 1997, Mr. Ranadivé has been the director most capable of effectively identifying strategic priorities, leading critical discussions and executing our strategy and business plans. Mr. Ranadivé possesses detailed and in-depth knowledge of the issues, opportunities, and challenges facing us and our industry. This involvement in the day-to-day operations of the Company allows Mr. Ranadivé to be in a position to elevate the most critical business issues for consideration by the independent directors of the Board. Independent directors and management sometimes have different perspectives and roles in strategy development. Our independent directors bring experience, oversight and expertise from outside of TIBCO, while our Chief Executive Officer brings company-specific experience and expertise. Our Board of Directors believes that Mr. Ranadivé’s combined role enables decisive leadership, ensures clear accountability, and enhances our ability to communicate our message and strategy clearly and consistently to our stockholders, employees and customers.

The independent members of our Board of Directors elect a Presiding Director every three years who serves as chair of the executive sessions of the independent directors. Mr. Job has served as the Presiding Director since 2007. Among other things, our Presiding Director serves as a liaison between the Chairman of the Board of Directors and Chief Executive Officer and our independent directors, and ensures that he or she is available for consultation and direct communication if requested by major stockholders. A description of the duties and responsibilities of the Presiding Director is available on our website at http://www.tibco.com under “About Us—Investor Information—Corporate Governance.”

 

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Board of Director’s Role in Risk Oversight

Our Board of Directors has responsibility for overseeing risk management for the Company. Our Board of Directors exercises this oversight responsibility directly and through its committees. Our Board of Directors oversees an enterprise-wide approach to risk management, designed to support the achievement of organizational objectives, including strategic objectives, to improve long-term organizational performance and enhance stockholder value. A fundamental aspect of risk management is not only understanding the risks a company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for the company. Our management team is responsible for balancing risk against our strategic goals. The involvement of the full Board of Directors in approving our business strategy and the evaluation of risks associated therewith is a key part of our risk assessment process.

Our management team conducts an annual risk assessment, the results of which are reviewed with the full Board of Directors. The centerpiece of the assessment is a discussion of our key risks, which includes the potential magnitude of each risk, likelihood of each risk and the speed with which the risk could impact us. As part of the process of analyzing each risk, management identifies the senior executive responsible for managing the risk, the risk’s potential impact and management’s initiatives to manage the risk.

The committees of our Board of Directors assist with its oversight responsibilities in certain areas of risk. The Audit Committee is primarily responsible for overseeing financial and enterprise risk exposures, including internal controls, and discusses our policies with management and our independent auditor with respect to risk assessment and risk management. The Audit Committee also assists our Board of Directors in fulfilling its duties and oversight responsibilities relating to our compliance with applicable laws and regulations and with conflict of interest issues that may arise. The Compensation Committee assists our Board of Directors in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs. The Nominating and Governance Committee considers risks related to corporate governance, including evaluating and considering evolving corporate governance best practices; and director and management succession planning.

Corporate Governance

We believe that sound corporate governance policies are essential to earning and retaining the trust of investors. We are committed to maintaining the highest standards of integrity. Our Board of Directors has adopted a diverse set of policies in furtherance of our corporate governance goals. These policies include a Code of Business Conduct and Ethics, a Code of Ethics for Chief Executive and Senior Financial Officers, Corporate Governance Guidelines and a Related Party Transaction Policy and Procedure. Please visit our website at http://www.tibco.com under “About Us—Investor Information—Corporate Governance” for copies of these policies and additional information on our corporate governance practices.

Relationships Among Directors, Executive Officers and Director Nominees

There are no family relationships between any director, executive officer or director nominee.

Stockholder Communication with the Board

Stockholders may send communications to the Board of Directors by writing to them at TIBCO Software Inc., Board of Directors, Attention: General Counsel, 3303 Hillview Avenue, Palo Alto, California, 94304. All stockholder communications that are received by the General Counsel for the attention of the Board of Directors or any individual members thereof are forwarded to the Board of Directors or the individual addressees. Comments or complaints relating to accounting or auditing matters may be submitted on-line to the members of the Audit Committee through our website at http://www.tibco.com under “About Us—Investor Information—Corporate Governance.” All members of our Audit Committee have access to these communications.

 

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Compensation Committee Interlocks and Insider Participation

The following directors served as members of our Compensation Committee during fiscal year 2013: Mr. Wood (Chairman), Mr. Job and Ms. Caldwell. During fiscal year 2013, none of our executive officers served on the board of directors or compensation committee of another entity one or more of whose executive officers served as a member of our Board of Directors or Compensation Committee. No member of the Compensation Committee at any time during fiscal year 2013, or at any other time, had any relationship with us that would be required to be disclosed as a related person transaction.

Board Committees

The Board of Directors has established various separately designated standing committees to assist it with the performance of its responsibilities. The Board of Directors designates the members of these committees and the committee chairs annually, based on the recommendations of the Nominating and Governance Committee. The Board of Directors has adopted written charters for each of these committees which are available on our website at http://www.tibco.com under “About Us—Investor Information—Corporate Governance.” The chair of each committee develops the agenda for that committee and determines the frequency and length of committee meetings.

Our Board of Directors has established the following three committees: (1) Audit Committee, (2) Compensation Committee and (3) Nominating and Governance Committee. The following chart shows the membership and chairpersons of the committees of our Board of Directors and committee meeting attendance during fiscal year 2013.

 

     Audit     Compensation     Nominating &
Governance
 

Number of Meetings Held in Fiscal Year 2013

     8        14        5   

Nanci E. Caldwell

       14     

Eric C.W. Dunn

     8    

Narendra K. Gupta

     7          5   

Peter J. Job

       13        5

Philip K. Wood

     8        14  

 

* Chairperson

Audit Committee

The Audit Committee oversees our audit activities. It is charged with providing oversight and monitoring the integrity of our financial statements; nominating to the Board of Directors an independent registered public accounting firm to audit our financial statements; and overseeing the activities, independence, qualifications and performance of our independent registered public accounting firm. The Audit Committee also assists the Board of Directors in overseeing our compliance with legal and regulatory requirements in connection with our financial reporting process. During fiscal year 2013, the Audit Committee consisted, and it currently consists, of Mr. Dunn, Mr. Wood and Dr. Gupta. The Audit Committee held eight meetings during fiscal year 2013. The Board of Directors has determined that Mr. Dunn is an “audit committee financial expert” as defined under regulations promulgated by the SEC. Each member of the Audit Committee is an “independent director” under both the rules and regulations of the SEC and The NASDAQ Stock Market. Please see the sections entitled “Report of the Audit Committee” and “Proposal Four: Ratification of Appointment of Independent Auditors” for further matters related to the Audit Committee.

Compensation Committee

The Compensation Committee reviews and establishes the compensation for our executive officers and our non-employee directors for their services as members of the Board of Directors. The Compensation Committee

 

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also reviews our compensation and benefits practices generally and oversees our equity compensation plans. Each member of the Compensation Committee is an outside director under Section 162(m) (“Section 162(m)”) of the Internal Revenue Code of 1986, as amended (the “Code”); and a non-employee director as such term is defined in the Exchange Act. During fiscal year 2013, the Compensation Committee consisted, and it currently consists, of Mr. Wood, Mr. Job and Ms. Caldwell. The Compensation Committee held 14 meetings during fiscal year 2013. Please see the sections entitled “Compensation Discussion and Analysis” and “Compensation Committee Report” for further matters related to the Compensation Committee.

Nominating and Governance Committee

The Nominating and Governance Committee reviews, evaluates and proposes candidates for election to our Board of Directors, and considers any nominees properly recommended by stockholders. The Nominating and Governance Committee also promotes the proper constitution of our Board of Directors in order to meet its fiduciary obligations to our stockholders, and oversees our establishment of and compliance with appropriate governance standards. During fiscal year 2013, the Nominating and Governance Committee consisted, and currently consists, of Mr. Job and Dr. Gupta. The Nominating and Governance Committee held five meetings during fiscal year 2013.

Director Nomination Process

Stockholder Nominations

Our bylaws contain provisions that address the process by which a stockholder may nominate an individual to stand for election to the Board of Directors. The Nominating and Governance Committee also reviews, evaluates and proposes prospective candidates for our Board of Directors and considers nominees properly recommended by stockholders. Stockholders wishing to submit nominations must provide timely written notice to our Corporate Secretary in accordance with the bylaws. Our bylaws specify the information with respect to each director nomination required to be included in the written notice that must be provided to our Corporate Secretary.

To be timely, a stockholder’s notice must be delivered to or mailed and received by the Corporate Secretary at our principal executive offices not later than the close of business on the 90th day, nor earlier than the close of business on the 120th day, prior to the anniversary date of the immediately preceding annual meeting. However, in the event that no annual meeting was held in the previous year or the annual meeting is called for a date that is not within thirty days before or more than sixty days after such anniversary date, notice by the stockholder to be timely must be so received not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of (i) the 90th day prior to such annual meeting and (ii) the tenth day following the day on which public announcement of the date of such annual meeting is first made. A copy of our bylaws is available on our website at http://www.tibco.com under “About Us—Investor Information—Corporate Governance.”

Director Qualifications and Diversity

Members of our Board of Directors must have broad experience and business acumen, a record of professional accomplishment in his or her field, and demonstrated honesty and integrity consistent with our values. In evaluating director nominees, the Nominating and Governance Committee considers a variety of factors, including, without limitation, the appropriate size of the Board of Directors, TIBCO’s needs with respect to the particular talents and experience of the directors, the nominee’s general experience, the nominee’s understanding of the technology industry, the nominee’s availability to attend Board and committee meetings, familiarity with national and international business matters, experience with accounting rules and practices, and professional expertise and experience beneficial to the achievement of our strategic goals. The Nominating and Governance Committee may also consider such other factors as it may deem are in our best interests and the best

 

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interests of our stockholders. The Nominating and Governance Committee believes that it is appropriate for at least one, and preferably several, members of the Board to meet the criteria for an “audit committee financial expert” as defined by the rules of the SEC, and for a majority of the members of the Board to meet the definition of “independent director” under both the rules and regulations of the SEC and The NASDAQ Stock Market. While we do not maintain a formal policy requiring the consideration of diversity in identifying nominees for director, we believe the minimum criteria for selection of members to serve on our Board of Directors described in this paragraph ensures that the Nominating and Governance Committee selects director nominees taking into consideration that the Board will benefit from having directors that represent a diversity of experience and backgrounds. These attributes, along with the leadership skills and other experiences of our Board members described on pages 10 and 11 below, provide us with a diverse range of experience, perspectives and judgment necessary to guide our strategies and monitor their execution.

Identifying Nominees

The Nominating and Governance Committee identifies nominees by first identifying the desired skills and experience of a new nominee based on the qualifications discussed above. The Nominating and Governance Committee will solicit ideas for possible candidates from members of the Board, senior level executives, and individuals personally known to the members of the Board as well as those identified by third-party search firms. The Nominating and Governance Committee evaluates all possible candidates, including individuals recommended by stockholders, using the same criteria.

 

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PROPOSAL ONE:

ELECTION OF DIRECTORS

Nominees

There are six nominees for election to our Board of Directors this year, all of whom are currently serving as directors. Unless otherwise instructed, the proxy holders will vote the proxies received by them for the nominees named below. If a nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who is designated by the present Board of Directors to fill the vacancy. We do not expect that any nominee will be unable or decline to serve as a director. Each director is elected annually to serve until the next annual meeting of stockholders or until a successor has been duly elected and qualified.

Based on a review by the Board of Directors of all relevant information, the Board of Directors has determined that as of the date of this Proxy Statement each of the director nominees standing for election, except Mr. Ranadivé, is an “independent director” under the Exchange Act and the criteria established by The NASDAQ Stock Market.

The names of and certain information regarding the nominees are set forth below. In addition, for each person we have included information regarding the business or other experience, qualifications, attributes or skills considered in determining that each such person should serve as a director.

Vivek Y. Ranadivé, age 56, has served as our Chief Executive Officer and Chairman of the Board of Directors since our inception in 1997. Mr. Ranadivé founded Teknekron Software Systems, Inc., our predecessor company, in 1985. Mr. Ranadivé serves on the Board of Directors of Nielsen Holdings N.V. and on the Supervisory Board of The Nielsen Company B.V.

As our founder and the Chief Executive Officer, Mr. Ranadivé provides significant institutional and industry knowledge and provides key insight and advice in the Board’s consideration and oversight of corporate strategy and management development. Mr. Ranadivé also provides the Board with a deep understanding of our products and technology, as well as perspective on corporate opportunities and industry trends.

Nanci E. Caldwell, age 55, has been one of our directors since 2009. From 2001 to 2004, Ms. Caldwell was Chief Marketing Officer at PeopleSoft, Inc., a software development company that was acquired in 2004. Prior to joining PeopleSoft, Inc. in 2001, Ms. Caldwell held various senior management positions at Hewlett-Packard Company, a provider of computing and imaging solutions and services. Ms. Caldwell serves on the Board of Directors of Citrix Systems, Inc. Ms. Caldwell also served as a member of the Board of Directors of Deltek Systems, Inc. from 2005 through 2012. Ms. Caldwell is a member of our Compensation Committee.

Ms. Caldwell’s extensive experience with technology and software companies, including in the area of sales and marketing, is a significant asset to the Board of Directors. Additionally, the Board benefits from Ms. Caldwell’s previous executive management experience and experience in international business. The Board also benefits from Ms. Caldwell’s experience as a public company director.

Eric C.W. Dunn, age 56, has been one of our directors since 2004. Since March 2010, Mr. Dunn has served as a Senior Vice President at Intuit Inc., a public software company. From 2003 to 2010, Mr. Dunn was a General Partner at Cardinal Venture Capital, a venture capital firm. From 2000 to 2003, Mr. Dunn owned and operated Kingston Creek Ventures, a venture capital firm. From 1986 to 2000, Mr. Dunn served in a number of senior executive capacities at Intuit Inc., including Chief Financial Officer and Senior Vice President and Chief Technology Officer. Mr. Dunn also served on the Board of Directors of SuccessFactors, Inc. from 2004 to 2012 and of Corillian Corporation from 2001 to 2007. Mr. Dunn is Chair of our Audit Committee.

As our Audit Committee financial expert and Chairman of the Audit Committee, Mr. Dunn provides a high level of expertise and prominent leadership experience in the areas of finance, accounting, audit oversight and risk analysis, including from his experience as the chief financial officer of a publicly-traded software company.

 

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Mr. Dunn also brings to the Board his investing experience through Cardinal Ventures. The Board also benefits from Mr. Dunn’s experience as a public company director.

Peter J. Job, age 72, has been one of our directors since 2000. From 1963 through his retirement in 2001, Mr. Job was employed by Reuters, a news service and former financial market data provider, most recently as its Chief Executive Officer. In addition, Mr. Job served on the supervisory board of Deutsche Bank AG from 2001 to 2011. Mr. Job is our Presiding Director, Chair of the Nominating and Governance Committee and a member of our Compensation Committee. Mr. Job has also previously served as a member of the Board of Directors of each of Schroders plc, Royal Dutch Shell, GlaxoSmithKline plc and Diageo plc, as well as on the supervisory board of Bertelsmann AG.

As a result of his tenure with TIBCO and his involvement with its predecessor company, Mr. Job has a strong institutional knowledge of our business and industry, which he is able to leverage in his capacity as our Presiding Director and Chairperson of our Nominating and Governance Committee. Mr. Job also provides significant experience from having led a large, multinational public company when he was Chief Executive Officer of Reuters, giving him executive management experience and extensive experience in strategic planning, risk analysis, corporate finance and governance. The Board also benefits from Mr. Job’s experience as a public company director of prominent international companies, which allows him to provide guidance on achieving success in different economic conditions, geographies and competitive landscapes.

David J. West, age 50, has been one of our directors since February 2014. From September 2011 to February 2014, Mr. West was the President, Chief Executive Officer and a Director of Del Monte Corporation, a food production and distribution company. Mr. West was appointed to the position of Chief Executive Officer of Del Monte Corporation in August 2011 after joining the company and its Board of Directors in June 2011. Since February 2014, Mr. West has been the President, Chief Executive Officer and a Director of Big Heart Pet Brands Inc., previously Del Monte Food Pet Products division, a $2 billion pet products company created following Del Monte’s recent sale of its Consumer Products division. Mr. West was an executive at The Hershey Company, a confectionery and chocolate products manufacturer, serving as President and Chief Executive Officer from December 2007 to May 2011, President from October 2007 to November 2007, and as Executive Vice President, Chief Operating Officer from January 2007 until October 2007. Between 2002 and 2007, he held senior sales and finance positions at The Hershey Company. Prior to joining The Hershey Company in December 2002, Mr. West served as Senior Vice President, Chief Financial Officer, of Nabisco Biscuit and Snacks Group, a subsidiary of Kraft Foods. Mr. West also served on the Board of Directors of The Hershey Company from 2007 through 2011 and of Tasty Baking Company from 2003 through 2011.

Mr. West offers a vast array of global business experience, including extensive experience in the retail and consumer industry. This experience is valuable to TIBCO in helping us expand our customer base. Mr. West also provides us with both executive level and outside board leadership at large public companies. Additionally, his financial background as a former Chief Financial Officer also gives the Board of Directors additional financial expertise.

Philip K. Wood, age 58, has been one of our directors since our inception in 1997. From 2004 to 2006, Mr. Wood was Chief Executive Officer of D1 Oils plc, an alternative energy crop company. From 1990 through 2004, Mr. Wood held various positions at Reuters, including Managing Director of Business Development. Prior to joining Reuters, Mr. Wood was a partner at the accounting firm of Price Waterhouse, a predecessor to PricewaterhouseCoopers LLP. He is a fellow of the Institute of Chartered Accountants and a member of the Association of Corporate Treasurers. Mr. Wood is Chair of the Compensation Committee and a member of our Audit Committee.

Mr. Wood provides the Board with an array of institutional knowledge and historical perspective on our business. Having served on our Board since inception and on the Board of our predecessor company, Mr. Wood delivers significant insights to our management team and other directors, which allows him to provide benefits on our executive compensation structure in his position as Chairman of the Compensation Committee. With his extensive accounting and corporate finance experience, Mr. Wood also brings his expertise in audit oversight and risk analysis to the Audit Committee.

 

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Director Compensation

Our Board establishes our non-employee director compensation to provide the appropriate level of compensation for the work required for service on our Board and to align our directors’ interests with the long-term interest of our stockholders. Our non-employee director compensation program consists of a mix of cash and long-term equity incentive awards. Our compensation policy for non-employee directors is to target our total cash compensation for directors at the 50th percentile and to target long-term equity incentive awards at the 50th percentile of our peer group. Only non-employee directors are compensated for serving on our Board.

Our Compensation Committee reviews non-employee director compensation on an as-needed basis. Our Compensation Committee reviewed our fiscal year 2013 compensation program for our non-employee directors in December 2012.

In fiscal year 2013, our non-employee director cash compensation program consisted of:

 

  ·  

An annual retainer of $30,000 for service on the Board of Directors;

 

  ·  

$1,500 for each Board meeting attended; and

 

  ·  

$1,000 for each committee meeting attended.

In fiscal year 2013, non-employee directors also received additional compensation for serving on committees or as a committee chairperson. Members (other than the chairpersons) of the Audit Committee, Compensation Committee and Nominating and Governance Committee were entitled to receive an additional annual retainer of $10,000, $7,500 and $2,500, respectively. The Chairpersons of the Audit Committee, Compensation Committee and Nominating and Governance Committee were entitled to receive an additional annual retainer of $20,000, $15,000 and $5,000, respectively. The Presiding Director of the Board of Directors was entitled to receive an additional annual retainer of $30,000. Because the chairperson of the Nominating and Governance Committee also serves as our Presiding Director, the Presiding Director did not receive an additional retainer for serving as the Chairman of the Nominating and Governance Committee. In fiscal year 2013, each of our directors continued to accept a voluntary reduction in the amount of compensation they received for their annual retainers for service on the Board of Directors and each committee of 5 percent from the levels set in our compensation program in order to contribute to our efforts to manage expenses.

In fiscal year 2013, our non-employee directors received a grant of 17,000 restricted stock units upon their reappointment at the annual meeting of stockholders. The restricted stock units vest in full on the earlier of (i) the first annual meeting of our stockholders that occurs after the vesting commencement date or (ii) the first anniversary of the vesting commencement date.

In the event that a new non-employee director had joined our Board of Directors during fiscal year 2013, such director would have received upon appointment an initial grant of 35,000 restricted stock units subject to annual vesting over three years.

In addition, any non-employee director who, as a result of serving on the Board of Directors, is required to file an additional tax return outside of his or her primary place of residence may receive reimbursement of up to $5,000 per year for the cost for such tax preparation and associated filing fees.

Pursuant to our 2009 Deferred Compensation Plan, non-employee directors may elect to defer some or all of their annual retainer and meeting fees in the form of restricted stock units that will be converted into shares of our common stock at the end of the deferral period. During fiscal year 2013, no non-employee directors participated in the deferral program.

In December 2013, our Board of Directors reviewed our non-employee director equity compensation and made the following adjustments: (i) upon initial appointment to the Board of Directors, a new non-employee director will

 

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receive an initial grant of 22,500 restricted stock units subject to annual vesting over three years and (ii) upon reappointment to the Board of Directors at the annual meeting of stockholders, a non-employee director who had been serving on the Board of Directors for at least six month prior to the annual meeting will receive a grant of 12,500 restricted stock units which vest in full on the earlier of (a) the first annual meeting of our stockholders that occurs after the vesting commencement date or (b) the first anniversary of the vesting commencement date.

Fiscal Year 2013 Director Compensation

The following table sets forth information concerning the compensation we paid to or was earned by each non-employee director during fiscal year 2013.

 

Name

   Fees
Earned or
Paid
in Cash
     Stock
Awards1
     Option
Awards2
     All Other
Compensation3
     Total  

Nanci E. Caldwell

   $ 64,126       $ 322,150         —           —         $ 386,276   

Eric C. W. Dunn

   $ 69,000       $ 322,150         —           —         $ 391,150   

Narendra K. Gupta

   $ 65,876       $ 322,150         —           —         $ 388,026   

Peter J. Job4

   $ 96,126       $ 322,150         —           —         $ 418,276   

Philip K. Wood

   $ 87,750       $ 322,150         —         $ 3,200       $ 413,100   

 

1 Represents the grant date fair value for awards granted in fiscal year 2013 to each of the non-employee directors, computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, excluding any estimates of future forfeitures. For a discussion of the assumptions used to calculate the value of stock awards, see Note 16 to our Consolidated Financial Statements in the Form 10-K for the year ended November 30, 2013, as filed with the SEC. In fiscal year 2013, each non-employee director who was elected at the 2013 Annual Meeting of Stockholders received an award of 17,000 restricted stock units with a deferral option. Additionally, Mr. Job received a fully-vested restricted stock unit award, the settlement of which he elected to defer, relating to $8,500 of his director’s fees that he earned in fiscal year 2013, the compensation related to this award is included under the Fees Earned or Paid in Cash column for Mr. Job and described in footnote 4 below. As of the end of fiscal year 2013, the directors had the following restricted stock unit awards outstanding: Ms. Caldwell: 34,000; Mr. Dunn: 74,000; Dr. Gupta: 91,000; Mr. Job: 37,134; and Mr. Wood: 71,000, which includes both unvested restricted stock unit awards and awards in which the settlement has been deferred.

 

2 As of the end of fiscal year 2013, the directors had the following stock option awards outstanding: Ms. Caldwell: 100,000; Mr. Dunn: 80,000; Dr. Gupta: 160,000; Mr. Job: 160,000; and Mr. Wood: 260,000.

 

3 All Other Compensation consists of the reimbursement of fees for the preparation of an additional tax return required by a taxing authority outside of the director’s place of primary residence.

 

4 Mr. Job elected to forego $8,500 of these fees as he elected to receive deferred restricted stock units instead pursuant to our 2009 Deferred Compensation Plan and as described in footnote 1 above.

Director Stock Ownership Guidelines

Pursuant to our stock ownership guidelines, each non-employee director is required to hold at least 20,000 shares of TIBCO common stock five years from the date the person becomes a non-employee director. All of our non-employee directors who have served for five years or longer currently meet the stock ownership guidelines. Additional details regarding the terms of our stock ownership guidelines are provided in “Compensation Discussion and Analysis.”

 

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE
ELECTION OF ALL OF THE NOMINEES.

 

 

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PROPOSAL TWO:

APPROVAL OF AN AMENDMENT AND RESTATEMENT

TO OUR 2008 EQUITY INCENTIVE PLAN

Introduction

We are asking stockholders to approve an amendment and restatement of the 2008 Equity Incentive Plan (as amended, the “Plan”). The Plan includes the following material changes:

 

  ·  

an increase in the number of shares of our common stock reserved for issuance under the Plan of 14,000,000 shares;

 

  ·  

setting an annual limit on the awards that may be granted to any non-employee director under the Plan, to be a maximum of $750,000 (increased to $1,000,000 in connection with a director’s initial service) for cash-settled awards and the same level for stock-settled awards;

 

  ·  

an adjustment to the Plan to provide that, without additional stockholder approval, incentive stock options may be granted under the Plan through, but not after, February 27, 2024; and

 

  ·  

a revision of the definition of Detrimental Activity in the clawback provision to include a restatement of our financial statements as a result of an intentional, willful or negligent act of any employee.

The Board of Directors has approved such amendments to the Plan, subject to approval from our stockholders at the Annual Meeting.

The Plan was originally adopted by the Board of Directors on February 27, 2008, and approved by our stockholders on April 17, 2008. On March 7, 2012, the Board of Directors approved an amendment and restatement of the Plan, which was approved by our stockholders on April 26, 2012 (the “2012 Amendment”). If stockholders approve the Plan at the annual meeting, the Plan as approved at the annual meeting will replace the version of the Plan that was approved by stockholders at the 2012 annual meeting. If stockholders do not approve the Plan at the annual meeting, we will continue to use the version of the Plan approved in 2012 (although the shares remaining available under the 2012 Amendment likely will be insufficient for our anticipated future needs).

After giving effect to the 2012 Amendment, a total of 28,000,000 shares of our common stock were authorized for issuance under the Plan, of which 3,635,221 were available for grant as of February 7, 2014. If stockholders approve the new amendment and restatement of the Plan (the “2014 Amendment”), the number of shares authorized for issuance under the Plan will be increased to a total of 42,000,000 shares (in other words, an increase of 14,000,000 shares to the 3,635,221 shares still available). We believe that increasing the shares reserved for issuance under the Plan is necessary for us to continue to offer a competitive equity incentive program in the future because equity incentive plans, designed to align the interests of executives with those of stockholders, are a fundamental element of our remuneration policy, as set forth in the section below entitled “Compensation Discussion and Analysis.” If the stockholders do not approve the proposed share increase, we believe we will not be able to continue to offer competitive equity packages to retain our current employees and hire new employees in future years. This could significantly affect our plans for growth and adversely affect our ability to operate our business.

In addition, the 2014 Amendment sets limits on awards that may be granted under the Plan to our non-employee directors. These limits are intended to be meaningful restrictions on the equity-based compensation that the Board of Directors may grant to its members while allowing us to provide equity compensation sufficient to attract highly qualified, experienced individuals to our Board. Under the 2014 Amendment, in any fiscal year, non-employee directors may receive cash-settled awards up to $750,000 in grant date fair value (and an additional $1,000,000 in connection with their initial service) and stock-settled awards up to $750,000 in grant date fair value (and an additional $1,000,000 in connection with their initial service). Finally, Section 422 of the Code limits the period during which incentive stock options may be granted to ten years after the earlier of the adoption of the plan or the date the plan is approved by stockholders. If the 2014

 

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Amendment is approved, incentive stock options may be granted under the Plan until February 27, 2024, whereas prior to the 2014 Amendment, the Plan would permit incentive stock options to be granted under the Plan through February 26, 2020.

Our 2013 Inducement Award Plan (the “Inducement Plan”), which is available only for limited use to induce new employees to join us, will remain in effect, and no shares from the Inducement Plan will become available for grant under the Plan, whether or not the amendment and restatement is approved. The Inducement Plan only allows us to meet a portion of our anticipated needs under our equity compensation program.

Under the Plan, each full value award granted on or after April 22, 2010 was counted against the Plan’s share reserve as 1.81 shares for each share subject to such Award and each full value award granted on or after April 26, 2012 is counted against the Plan’s share reserve as 2.00 shares for each share subject to such award. We believe that this provides for flexibility with respect to our ongoing long-term incentive program, while limiting the future dilution to our stockholders as a result of the granting of full value awards.

In determining the number of additional shares to become available under our Plan, the Board of Directors and the Compensation Committee considered the following factors:

 

  ·  

Remaining Competitive.    The Plan plays an important role in our ability to offer competitive compensation to our employees in the future, more closely align the interests of executives with those of our stockholders, and attract and retain high-performing employees for whom we compete among a limited pool of talent.

 

  ·  

Historical Grant Practices.    The historical amount of equity awards that we have granted in the past three fiscal years was a total of approximately 10.2 million shares.

 

  ·  

Forecasted Grants.    If our stockholders approve the 2014 Amendment, we currently anticipate that the shares as approved under the Plan will meet our expected needs through 2016. In determining the projected share utilization, the Compensation Committee and the Board considered a forecast that included the following factors: (i) 3,635,221 unissued shares remaining under the Plan and 466,908 unissued shares remaining under the Inducement Plan; (ii) the additional 14,000,000 shares that would be available for grant under the Plan, if the stockholders approve the Plan, as amended; (iii) estimated cancellations returned back to the Plan; (iv) the full value awards to be granted subject to stockholder approval of the 2014 Amendment (as discussed below under the heading “Performance-Based Restricted Stock Unit Awards”); (v) shares reserved to cover the potential payout of outstanding performance-based awards at the maximum payout if top performance levels are attained and (vi) the impact of the fungible ratio for full value awards. We anticipate that we may request additional shares under the Plan next at our annual meeting of stockholders in 2017, however, future circumstances and changes in our business needs may require a different result.

Summary of Our Existing Equity Plans

The following table provides certain additional information regarding our existing equity plans (except our Employee Stock Purchase Plan):

 

Name of Plan

   As of
February 7, 2014
 

Total Stock Options Outstanding

     8,032,563   

Total Full Value Awards Outstanding

     5,138,518   

Weighted-Average Exercise Price of Stock Options Outstanding

   $ 11.6597   

Weighted Average Duration of Stock Options Outstanding

     1.67 years   

Total Shares Available For Grant under the Inducement Plan

     466,908   

Total Shares Available for Grant under the Plan

     3,635,221   

Total Shares Available for Grant under the 2009 Deferred Compensation Plan

     979,765   

Total Common Stock Outstanding

     161,820,477   

 

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Performance-Based Restricted Stock Unit Awards

On February 27, 2014, the Compensation Committee, which administers the Plan, approved the grant of certain performance-based restricted stock unit awards (the “Performance Awards”) to our executive officers, including each of our named executive officers. The Performance Awards are conditioned on stockholders approving the amended and restated Plan at the Annual Meeting. If stockholders do not approve the Plan, the Performance Awards will be cancelled.

The Performance Awards are intended to align the interests of management with the long-term interests of stockholders by providing management with a special incentive to increase our non-GAAP earnings per share (“EPS”) to not less than $2.00 for a single fiscal year. Non-GAAP EPS of at least $2.00 in a fiscal year is the “EPS Goal.” Our non-GAAP EPS in fiscal year 2013 was $1.06. The Performance Awards are scheduled to vest only if the EPS Goal is achieved during one of the fiscal years 2016, 2017 or 2018. Importantly, the number of Performance Awards (if any) that actually vest also depends on the Company’s EPS performance during the fiscal year(s) before and/or after the year in which the EPS Goal first is achieved. This design is intended to focus management on achieving a sustained increase in non-GAAP EPS over multiple fiscal years. Each Performance Award also requires that the officer remain an employee of the Company through the applicable vesting date, which generally will be no later than the January 31 following the fiscal year in which the applicable performance goal is achieved.

If the EPS Goal is first achieved in fiscal year 2016, 60% of the Performance Awards will be available to vest. If fiscal year 2015 non-GAAP EPS is $1.62 or higher, the remaining unvested Performance Awards will be eligible to vest. Some or all of the remaining unvested Performance Awards will be available to vest if non-GAAP EPS in fiscal year 2015 is less than $1.62 but in one or both of fiscal years 2017 and 2018, non-GAAP EPS is greater than 80% of the EPS Goal. Higher non-GAAP EPS will result in a greater percentage of the unvested Performance Awards being available to vest (but never more than the total original grant).

If the EPS Goal is first achieved in fiscal year 2017, the percentage of Performance Awards that will be available to vest will be 50% or 100%, depending on non-GAAP EPS in fiscal year 2016. If fiscal year 2016 non-GAAP EPS is $1.71 or higher, the percentage will be 100%. The percentage will be only 50% if fiscal year 2016 non-GAAP EPS is less than $1.71. Some or all of any remaining unvested Performance Awards will be available to vest if non-GAAP EPS in fiscal year 2018 is greater than 80% of fiscal year 2017 non-GAAP EPS (higher non-GAAP EPS in fiscal year 2018 results in greater vesting of any remaining unvested Performance Awards).

If the EPS Goal is first achieved in fiscal year 2018, the percentage of Performance Awards that will be available to vest will be 50% or 100%, depending on non-GAAP EPS in fiscal year 2017. If fiscal year 2017 non-GAAP EPS is $1.76 or higher, the percentage will be 100%. The percentage will be only 50% if fiscal year 2017 non-GAAP EPS is less than $1.76. Some or all of any remaining unvested Performance Awards will be available to vest if non-GAAP EPS in fiscal year 2019 is greater than 80% of fiscal year 2018 non-GAAP EPS (higher non-GAAP EPS in fiscal year 2019 results in greater vesting of any remaining unvested Performance Awards).

Some of the Performance Awards will be forfeited automatically if both (1) the EPS Goal is not achieved during fiscal year 2016 and fiscal year 2017, and (2) non-GAAP EPS in fiscal year 2016 and/or 2017 is below certain levels. Specifically, 25% of the Performance Awards will be forfeited if fiscal year 2016 non-GAAP EPS is less than $1.20. Similarly, if fiscal year 2017 EPS is less than $1.40, up to 50% of the Awards will be forfeited. These forfeitures apply even if the EPS Goal is achieved in a subsequent fiscal year.

The Committee has full discretion and authority to modify the performance goals and vesting schedule as it deems appropriate to reflect business conditions or circumstances, even if this results in a change in the number of Performance Awards becoming available to vest. Subject to the Committee’s authority in the preceding sentence, if there is a change of control of the Company (as defined in the Plan), some or all of the Performance Awards may be available to vest, depending on achievement of non-GAAP EPS levels prior to the change of control and the timing of the change of control. Full details of the Performance Awards, including the definition of non-GAAP EPS, are contained in the applicable Performance Award agreements.

 

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Summary of the Plan

The following general description of material features of the Plan is qualified in its entirety by reference to the provisions of the Plan set forth in Exhibit A.

Background, Purpose and Eligibility Under the Plan

The Plan is intended to attract, motivate and retain our employees and the employees of our subsidiaries, consultants who provide significant services to us and our subsidiaries and our non-employee directors. The Plan permits the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards and other cash-based awards (each individually, an “Award”). Our employees and the employees of our subsidiaries, consultants who provide significant services to us and our subsidiaries, and non-employee directors are eligible to receive Awards under the Plan. As of November 30, 2013, we had approximately 3,856 employees, including 8 executive officers and 5 non-employee directors, and we had 728 consultants, who would be eligible to participate in the Plan. As a result, our executive officers and non-employee directors have an interest in this proposal because they are eligible to participate in the Plan.

The Plan is intended to permit us to choose to grant Awards that qualify as performance-based compensation under Section 162(m).

Limits on Awards

The Plan places limits on the maximum amount of Awards that may be granted to any Plan participant in any fiscal year. Under the Plan, no participant may receive Awards of stock options and/or stock appreciation rights that cover in the aggregate more than two million (2,000,000) shares of common stock in any fiscal year. However, during the fiscal year in which a participant first becomes an employee of us or our subsidiaries, such employee may be granted stock options and/or stock appreciation rights covering up to a total of an additional two million (2,000,000) shares of common stock. Additionally, no Plan participant may receive Awards of restricted stock and/or restricted stock units that cover in the aggregate more than seven hundred thousand (700,000) shares of common stock in any fiscal year. However, during the fiscal year in which a participant first becomes an employee of us or our subsidiaries, such employee may be granted up to a total of an additional seven hundred thousand (700,000) shares of restricted stock and/or restricted stock units. The maximum value of the total payment pursuant to any other cash-based Award is ten million dollars ($10,000,000) in any fiscal year and the maximum number of shares that may be granted pursuant to any other stock-based Awards is two million (2,000,000) shares in any fiscal year. In addition, the 2014 Amendment sets limits on awards that may be granted under the Plan to our non-employee directors. Under the 2014 Amendment, in any fiscal year, non-employee directors may receive cash-settled awards up to $750,000 in grant date fair value (and an additional $1,000,000 in connection with their initial service) and stock-settled awards up to $750,000 in grant date fair value (and an additional $1,000,000 in connection with their initial service).

Administration

The Compensation Committee administers the Plan. Subject to the terms of the Plan, the Compensation Committee has the sole discretion to select the employees, consultants and non-employee directors who will receive Awards, determine the terms and conditions of Awards (for example, the exercise price and vesting schedule), and interpret the provisions of the Plan and outstanding Awards. The Compensation Committee has the authority to adopt such procedures and subplans as are necessary or appropriate to permit participation in the Plan by foreign nationals or employees, and adopt rules and guidelines for the administration, interpretation and application of the Plan. The Compensation Committee, however, may not implement an exchange program (such as a stock option repricing) without the approval of the holders of a majority of the shares that are present in person or by proxy and entitled to vote at any annual or special meeting of our stockholders. The Compensation Committee may delegate its authority and power under the Plan to one or more of our officers, subject to guidelines prescribed by the Compensation Committee, but only with respect to awards to be granted to or held

 

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by employees who are not subject to Section 16 of the Exchange Act (we refer to those employees who are subject to Section 16 of the Exchange Age as “Section 16 officers”) and not with respect to any Awards that are intended to qualify as performance-based compensation under Section 162(m) if such delegation would cause the Award to fail to so qualify. The Compensation Committee may permit a participant to defer receipt of payment of cash or delivery of shares of common stock that otherwise would be due to him or her pursuant to an Award, subject to rules and procedures that the Compensation Committee determines. Further, the Compensation Committee or the Board of Directors may cancel, rescind, forfeit, suspend or otherwise limit or restrict an unexpired Award at any time held by a Section 16 officer if he or she engaged in Detrimental Activity (as defined in the Plan). Also, if a Section 16 officer engages in Detrimental Activity at any time prior to or during the six months after any exercise of, lapse of restriction under or delivery of shares under an Award, such exercise, lapse or delivery may be rescinded until the later of two years after such exercise, lapse or delivery or two years after such Detrimental Activity. All determinations and decisions made by the Compensation Committee, the Board of Directors and any delegate of the Compensation Committee pursuant to the provisions of the Plan will be final, conclusive and binding on all persons and given the maximum deference permitted by law.

Shares Reserved for Awards

Subject to approval by our stockholders of the 2014 Amendment, the number of shares reserved for issuance under the Plan will be increased to 42,000,000 (an increase of 14,000,000 shares). If the 2014 Amendment is not approved by our stockholders, the Plan’s share reserve will remain at 28,000,000 shares as last approved by our stockholders in 2012, although those shares remaining available under the Plan likely will be insufficient to meet our anticipated future needs.

Shares subject to outstanding full value awards will continue to count against the Plan’s share reserve as 2.00 shares for each share subject to such Award. If any shares subject to outstanding full value awards are forfeited or repurchased by us, the shares will continue to return to the Plan’s share reserve at a rate of 2.00 times the number of shares forfeited or repurchased by us.

To the extent any shares subject to an Award under the Plan or an award under our 1996 Stock Option Plan or the 1998 Director Option Plan is settled in cash or terminates or expires or is forfeited or cancelled, those shares subject to such Award or award will again be available for distribution under the Plan. Shares that are used by a participant to pay tax withholdings or as payment for the exercise price of an Award will cease to be available under the Plan. Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not be available for future distribution under the Plan. However, if unvested shares of restricted stock, restricted stock units, or other stock-based Awards are repurchased by or forfeited to us, those shares will become available for future grant under the Plan. If an Award is paid out in cash rather than shares, such cash payment will not reduce the number of shares available under the Plan.

In the event that any dividend or other distribution (whether in the form of cash, shares of common stock, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of shares of our common stock or other of our securities, or other change in our corporate structure affecting the common stock such that an adjustment is determined by the Compensation Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Compensation Committee shall adjust the number and class of shares available for issuance under the Plan, the number, class and price of shares (or other property or cash) subject to outstanding Awards and the per-person limits on Awards, as appropriate to reflect the stock dividend or other change.

Performance-Based Awards

Awards of restricted stock, restricted stock units, and other incentives under the Plan may be made subject to the attainment of performance goals relating to one or more business criteria within the meaning of

 

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Section 162(m) and may provide for a targeted level or levels of achievement including: (i) earnings including operating income, earnings before or after taxes, earnings before or after interest, depreciation, amortization, or extraordinary or special items or book value per share (which may exclude nonrecurring items); (ii) pre-tax income or after-tax income; (iii) earnings per common share (basic or diluted); (iv) operating profit; (v) revenue, revenue growth or rate of revenue growth; (vi) return on assets (gross or net), return on investment, return on capital, or return on equity; (vii) returns on sales or revenues; (viii) operating expenses; (ix) stock price appreciation; (x) cash flow, free cash flow, cash flow return on investment (discounted or otherwise), net cash provided by operations, or cash flow in excess of cost of capital; (xi) implementation or completion of critical projects or processes; (xii) economic value created; (xiii) cumulative earnings per share growth; (xiv) operating margin or profit margin; (xv) common stock price or total stockholder return; (xvi) cost targets, reductions and savings, productivity and efficiencies; (xvii) intellectual property (e.g., patents); (xviii) product development; (xix) strategic business criteria, consisting of one or more objectives based on meeting specified market penetration, geographic business expansion, customer satisfaction, employee satisfaction, human resources management, supervision of litigation, information technology, and goals relating to acquisitions, divestitures, joint ventures and similar transactions, and budget comparisons; (xx) personal professional objectives, including any of the foregoing performance goals, the implementation of policies and plans, the negotiation of transactions, the development of long term business goals, formation of joint ventures, research or development collaborations, and the completion of other corporate transactions; and (xxi) any combination of, or a specified increase in, any of the foregoing. The performance goals may include a threshold level of performance below which no payment will be made (or no vesting will occur), levels of performance at which specified payments will be made (or specified vesting will occur), and a maximum level of performance above which no additional payment will be made (or at which full vesting will occur). When applicable, the performance goals may be expressed in terms of attaining a specified level of the particular criteria or the attainment of a percentage increase or decrease in the particular criteria, and may be applied to one or more of us, a subsidiary or a division or strategic business unit of us, or may be applied to our performance relative to a market index, a group of other companies or a combination thereof, all as determined by the Compensation Committee. Each of the foregoing performance goals may be determined either in accordance with generally accepted accounting principles (“GAAP”) or on a non-GAAP basis and shall be subject to certification by the Compensation Committee; provided that, to the extent an Award is intended to satisfy the performance-based compensation exception to the limits of Section 162(m) and then to the extent consistent with such exception, the Compensation Committee shall have the authority to make equitable adjustments to the performance goals in recognition of unusual or non-recurring events affecting us or any of our subsidiaries or the financial statements of us or any of our subsidiaries, in response to changes in applicable laws or regulations, or to account for items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business or related to a change in accounting principles. Awards that are not intended to qualify under Section 162(m) and Awards that are issued to persons who are not “covered employees” within the meaning of Section 162(m) may take into account any other factors deemed appropriate by the Compensation Committee.

Restricted Stock

Shares of restricted common stock may be granted under the Plan. The restricted stock will vest and become transferable upon the satisfaction of conditions set forth in the respective restricted stock award agreement. The Compensation Committee may set restrictions based on continued employment or service with us and our subsidiaries, the achievement of specific performance objectives (company-wide, departmental, or individual), applicable federal or state securities laws, or any other basis determined by the Compensation Committee. Except as specified in the restricted stock award agreement, the holder of a restricted stock Award will have all the rights of a holder of common stock on his or her restricted shares, including voting rights and the right to receive all dividends and other distributions paid with respect to the shares of restricted stock; provided, however, that dividends and distributions generally will be subject to the same vesting criteria as the shares of restricted stock upon which the dividend or distribution was paid.

 

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Restricted Stock Units

Units representing the right to receive common stock, cash, or both (as determined by the Compensation Committee) may also be granted under the Plan. Restricted stock units will vest or become earned upon the satisfaction of conditions set forth in the award agreements. Restricted stock units may be forfeited if, for example, the recipient’s employment terminates before the Award vests. Except as specified in a restricted stock unit award agreement, the holder of a restricted stock unit Award will have none of the rights of a holder of common stock unless and until shares of common stock are actually delivered in satisfaction of such units.

Stock Options

The Plan permits the granting to eligible employees of incentive stock options (“ISOs”), which entitle employees to more favorable tax treatment, and granting of nonqualified stock options to eligible employees, consultants and non-employee directors. The exercise price for any stock option will not be less than the fair market value of common stock on the grant date. No stock option may be exercised more than seven years after the grant date unless the Compensation Committee provides that the estate of a Plan participant who dies prior to the expiration of his or her nonqualified stock options will have up to 12 months from the date of death to exercise such options. In the event that an ISO is granted to an employee who either alone or together with persons whose common stock ownership is attributable to the employee, on the date of grant owns more than ten percent of the total combined voting power of all classes of our stock, then (i) the exercise price for such ISO grant shall be not less than 110 percent of fair market value on the grant date and (ii) such ISO may not be exercised after the expiration of five years from the grant date. Unless otherwise determined by the Compensation Committee, stock options may be exercised by (a) payment in cash or its equivalent, (b) tendering previously acquired common stock to us having an aggregate fair market value equal to the total exercise price, or (c) by any other means approved by the Compensation Committee.

Stock Appreciation Rights (“SARs”)

SARs may also be granted either singly or in combination with underlying stock options. SARs entitle the holder upon exercise to receive an amount in any combination of cash or shares of common stock (as determined by the Compensation Committee) equal in value to the excess of the fair market value of the shares covered by such right over the exercise price. The exercise price for SARs will not be less than the fair market value of common stock on the grant date. The same rules regarding the expiration of nonqualified stock options also apply to SARs.

Other Stock-Based and Other Cash-Based Awards

The Plan also provides for other Awards that are determined by the Compensation Committee consistent with the purposes of the Plan. The terms and conditions of these Awards will be specified by the Compensation Committee consistent with the terms of the Plan. No payment under an Award intended to qualify as performance-based compensation under 162(m) will be made to a “covered employee” (within the meaning of Section 162(m) of the Code) prior to certification by the Compensation Committee that the performance goals applicable to the Award have been attained. The Compensation Committee may establish other rules applicable to other stock-based or cash-based Awards. Payments earned in respect of any cash-based Awards may be decreased or, with respect to any Award recipient who is not a covered employee, increased by the Compensation Committee based on such factors it deems appropriate.

Change in Control Provisions

The Plan provides that, in the event of a “Change of Control” (as defined in the Plan), the successor corporation may assume or provide a substitute award for each outstanding Award of stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based Awards. In the event that successor corporation does not assume or provide substitute Awards of stock options, stock appreciation rights, restricted stock and restricted stock units as well as other stock-based Awards, the non-assumed Award shall be deemed fully earned and vested subject to any restrictions set forth in the applicable Award agreement. In the event that the successor corporation does not

 

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assume any outstanding other cash-based Awards, the applicable Award agreement may provide that a pro-rata portion of the other cash-based Awards shall be considered earned and payable based on the portion of the applicable performance period completed as of the date of the Change of Control and based on performance to date or target performance. In addition, the Plan provides that in the event that a successor company terminates the employment of an employee without cause within 24 months of a change of control, all of the employee’s equity awards outstanding under the Plan will be accelerated in full. The Compensation Committee, in its discretion, may determine that options, SARs, restricted stock, restricted stock units and other stock-based Awards will terminate within a specified number of days after providing notice to the Award holder and the Award holder will receive an amount in cash, stock and/or other property equal to the fair market value of the underlying shares of our common stock immediately prior to the Change of Control (or with respect to options and SARs, the excess, if any, of the fair market value of the underlying shares of common stock immediately prior to the Change of Control over the aggregate exercise price of the shares of common stock underlying such Award). The Compensation Committee may determine such amount to be payable in cash, in one or more kinds of stock or property or in a combination of both.

Awards Granted to Certain Individuals and Groups

The number of Awards (if any) that an employee, consultant, or non-employee director may receive under the Plan is in the discretion of the Compensation Committee and therefore cannot be determined in advance. Our executive officers and directors have an interest in this proposal because they are eligible to receive Awards under the Plan. Also, as described in the section entitled “Introduction” in this Proposal Two, the Named Executive Officers and our other executive officers have been granted the Performance Awards, subject to the approval of our stockholders of the amended and restated Plan. The following table sets forth (a) the total number of shares of our common stock subject to the Performance Awards as granted to the listed persons and groups, and (b) the fair market value of the shares granted as of the Performance Awards’ grant date.

 

Name of Individual or Group1

  Number of Performance
Awards Granted on
February 27, 2014
    Grant Date Fair Value of
Shares Subject to Performance
Awards Granted1
 

Vivek Ranadivé, Chief Executive Officer and Chairman of the Board

    500,000      $ 11,015,000   

Matt Langdon, Senior Vice President, Chief Financial Officer

    125,000      $ 2,753,750   

Sydney Carey2, Former Chief Financial Officer

    0      $ 0   

Murray Rode, Executive Vice President, Chief Operating Officer and Former Interim Chief Financial Officer

    250,000      $ 5,507,500   

Murat Sonmez, Executive Vice President, Global Field Operations

    250,000      $ 5,507,500   

William Hughes, Executive Vice President, General Counsel and Secretary

   
 

220,000
 
  
  $ 4,846,600   

Peter Lee2, Former Executive Vice President, Analytics and Customer Loyalty

   
 

0
 
  
  $ 0   

All executive officers, as a group (8 persons)

    1,520,000      $ 33,485,600   

All directors who are not executive officers, as a group (5 persons)3

   
 

0
 
  
  $ 0   

All employees who are not executive officers, as a group

    0      $ 0   

 

1 Represents the grant date fair value for awards of restricted stock, performance-based restricted stock units and stock options granted on February 27, 2014 and computed in accordance with FASB ASC Topic 718, excluding any estimates of future forfeitures. For a discussion of the assumptions used to calculate the value of awards of restricted stock, the performance-based restricted stock units and the stock options, see Note 16 to our Consolidated Financial Statements in the Form 10-K for the year ended November 30, 2013, as filed with the SEC.

 

2 Ms. Carey and Mr. Lee, two of our Named Executive Officers for fiscal year 2013, are no longer employed by us and, as such, did not receive a grant of Performance Awards on February 27, 2014.

 

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3 Our non-employee directors were not granted any Performance Awards on February 27, 2014. Each director (other than Mr. West who will have served on the Board of Directors for less than six months) will, however, receive a grant 12,500 restricted stock units if they are reappointed to the Board of Directors at the annual meeting of stockholders. Additionally, on February 27, 2014, Mr. West received a grant of 22,500 restricted stock units related to his appointment to the Board of Directors, which had a grant date fair value of $495,675. If the four non-employee directors other than Mr. West are reappointed, their grants would total 50,000 restricted stock units, the grant date fair value of which would be determined on the date of grant.

Summary of U.S. Federal Income Tax Consequences

The following summary is intended only as a general guide to the material U.S. federal income tax consequences of participation in the Plan. The summary is based on existing U.S. laws and regulations, and there can be no assurance that those laws and regulations will not change in the future. The summary does not purport to be complete and does not discuss the tax consequences upon a participant’s death, or the provisions of the income tax laws of any municipality, state or foreign country in which the participant may reside. As a result, tax consequences for any particular participant may vary based on individual circumstances.

Restricted Stock

A participant acquiring restricted stock generally will not have taxable income at the time that the Award is granted. Instead, he or she generally will recognize ordinary income equal to the fair market value of the shares in the year that the shares become (i) freely transferable or (ii) no longer subject to substantial risk of forfeiture. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. The participant may elect, pursuant to Section 83(b) of the Code, to accelerate the ordinary income tax event to the date of acquisition by filing an election with the Internal Revenue Service no later than 30 days after the date the shares are acquired. In that case, the ordinary income tax recognized will be the fair market value of the shares underlying the Award (less any cash paid for the shares) on the date the shares are acquired. Upon the sale of shares acquired pursuant to a restricted stock Award, any gain or loss, based on the difference between the sale price and the fair market value on the date the ordinary income tax event occurs, will be taxed as capital gain or loss.

Restricted Stock Units

There are no immediate tax consequences of receiving an Award of restricted stock units. A participant who is awarded restricted stock units generally will be required to recognize ordinary income in an amount equal to the fair market value of shares issued to such participant when the shares become (i) freely transferable or (ii) no longer subject to substantial risk of forfeiture. Any additional gain or loss recognized upon any later disposition of any shares received would be capital gain or loss.

Nonqualified Stock Options

Options not designated or qualifying as incentive stock options will be nonqualified stock options having no special tax status. An optionee generally recognizes no taxable income as the result of the grant of such an option. Upon exercise of a nonqualified stock option, the optionee normally recognizes ordinary income equal to the amount that the fair market value of the shares on such date exceeds their exercise price. If the optionee is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of stock acquired by the exercise of a nonqualified stock option, any gain or loss, based on the difference between the sale price and the fair market value on the exercise date, will be taxed as capital gain or loss.

Incentive Stock Options

An optionee recognizes no taxable income for regular income tax purposes as a result of the grant or exercise of an incentive stock option qualifying under Section 422 of the Code. Optionees who neither dispose of their shares within two years following the date the option was granted nor within one year following the exercise of the option normally will recognize a capital gain or loss equal to the difference, if any, between the

 

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sale price and the purchase price of the shares. If an optionee satisfies such holding periods upon a sale of the shares, we will not be entitled to any deduction for federal income tax purposes. If an optionee disposes of shares within two years after the date of grant or within one year after the date of exercise (a “disqualifying disposition”), the difference between the fair market value of the shares on the exercise date and the option exercise price (not to exceed the gain realized on the sale if the disposition is a transaction with respect to which a loss, if sustained, would be recognized) will be taxed as ordinary income at the time of disposition. Any gain in excess of that amount will be a capital gain. If a loss is recognized, there will be no ordinary income, and such loss will be a capital loss. Any ordinary income recognized by the optionee upon the disqualifying disposition of the shares generally should be deductible by us for federal income tax purposes, except to the extent such deduction is limited by applicable provisions of the Code.

The difference between the option exercise price and the fair market value of the shares on the exercise date is treated as an adjustment in computing the optionee’s alternative minimum taxable income and may be subject to an alternative minimum tax which is paid if such tax exceeds the regular tax for the year. Special rules may apply with respect to certain subsequent sales of the shares in a disqualifying disposition, certain basis adjustments for purposes of computing the alternative minimum taxable income on a subsequent sale of the shares and certain tax credits that may arise with respect to optionees subject to the alternative minimum tax.

Stock Appreciation Rights

In general, no taxable income is reportable when a stock appreciation right is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the fair market value of any shares of our common stock received. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss.

Other Stock-Based Awards/Other Cash-Based Awards

Any cash payments or the fair market value of any common stock or other property an employee receives in connection with other stock-based Awards or other cash-based Awards, or as unrestricted payments equivalent to dividends on unfunded Awards or on restricted stock generally are includable in income in the year received or made available to the employee without substantial limitations or restrictions. Generally, we will be entitled to deduct the amount the employee includes in income in the year of payment.

Deductibility of Awards

We generally will be entitled to a tax deduction in connection with an Award under the Plan in an amount equal to the ordinary income realized by a participant and at the time the participant recognizes such income (for example, the exercise of a nonqualified stock option). However, Section 162(m) places a $1,000,000 annual limit on the compensation deductible by us paid to our Chief Executive Officer and to each of our other three most highly paid executive officers, other than the Chief Financial Officer. This limit, however, does not apply to “performance-based compensation” as defined in Section 162 (m). The Plan design is intended to permit (but not require) the Compensation Committee to grant Awards that are intended to qualify as performance-based compensation under Section 162(m), thereby permitting us to receive a federal income tax deduction in connection with such Awards. Among other things, Section 162(m) requires that stockholders approve the Plan under which the “performance-based compensation” is paid. Furthermore, Section 162(m) generally requires that plans such as the Plan be reapproved by stockholders at least every five years. The Plan most recently was approved by our stockholders at our 2012 annual meeting. If stockholders approve the 2014 Amendment at the annual meeting, it will assist us in seeking a full tax deduction for certain Awards granted under the Plan.

Deferred Compensation

A participant who defers the payout of an Award or the delivery of proceeds payable upon an Award exercise will recognize ordinary income at the time of payout in the same amounts as described above. If the

 

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participant receives shares, any additional gain or loss recognized upon later disposition of the shares is capital gain or loss. Any deferrals made under the Plan, including Awards granted under the plan that are considered to be deferred compensation, must satisfy the requirements of Section 409A of the Code to avoid adverse tax consequences to participating employees. These requirements include limitations on election timing, acceleration of payments, and distributions. If an Award is subject to and fails to satisfy the requirements of Section 409A, the recipient of that Award may recognize ordinary income on the amounts deferred under the Award, to the extent vested, which may be prior to when the compensation is actually or constructively received. Also, if an Award that is subject to Section 409A fails to comply with Section 409A’s provisions, Section 409A imposes an additional 20 percent federal income tax on compensation recognized as ordinary income, as well as interest on such deferred compensation. In addition, certain states (such as California), have laws similar to Section 409A and as a result, failure to comply with such similar laws may result in additional state income, penalty and interest charges. We intend to structure any deferrals and Awards under the Plan to meet the applicable tax law requirements.

Other Tax Consequences

State tax consequences may in some cases differ from those described above. Awards under the Plan will in some instances be made to employees who are subject to tax in jurisdictions other than the United States and may result in tax consequences differing from those described above.

Other Information

The Board of Directors approved the amendment and restatement of the Plan on February 27, 2014, subject to stockholder approval. The Plan shall remain in effect unless amended, terminated, or suspended by the Board of Directors. However, without further stockholder approval, no ISO may be granted under the Plan after February 26, 2020. The Board of Directors may amend the Plan at any time, provided that no such amendment will be made without stockholder approval if such approval is required under applicable law, regulation, or stock exchange rule, or if such amendment would: (i) decrease the grant or exercise price of any stock option, SAR or other stock-based Award to less than fair market value on the date of grant (except as discussed above under “Shares Reserved for Awards”) or (ii) increase the number of shares of common stock that may be distributed under the Plan.

Awards granted under the Plan generally may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the applicable laws of descent and distribution or a qualified domestic relations order and shall be available only to a participant during the lifetime of the participant. Notwithstanding the foregoing, the Compensation Committee may permit a participant to transfer an Award by bona fide gift for no consideration in certain limited situations. Other terms and conditions of each Award will be set forth in award agreements, which can be amended by the Compensation Committee.

On February 27, 2014, the closing price on the NASDAQ Global Select Market of our common stock was $22.03 per share.

Required Vote

If a quorum exists at the 2014 Annual Meeting of Stockholders, the Plan will be approved if the votes cast in favor of the plan exceed the votes cast against and those that vote to abstain.

 

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE AMENDMENT AND RESTATEMENT OF THE 2008 EQUITY INCENTIVE PLAN.

 

 

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PROPOSAL THREE:

ADVISORY VOTE ON THE COMPENSATION

OF OUR NAMED EXECUTIVE OFFICERS

We are asking our stockholders to approve, on an advisory basis, the compensation of our Named Executive Officers as disclosed in this proxy statement pursuant to Section 14A of the Securities Exchange Act. While this advisory vote is non-binding, our Board of Directors and our Compensation Committee value the opinions of our stockholders and will consider the outcome of the vote when making future compensation decisions for our Named Executive Officers.

As described in detail under the heading “Compensation Discussion and Analysis,” our executive compensation programs are designed to align the interest of our executives with those of our stockholders by rewarding performance that meets or exceeds established goals. Our executive compensation program is designed to reward superior performance, to attract and retain our Named Executive Officers, and to base compensation on the specific requirements of each position. Under our compensation programs, our Named Executive Officers are rewarded for specific annual and long-term goals. Please read “Compensation Discussion and Analysis” for additional details about our executive compensation programs, including information about the fiscal year 2013 compensation of our Named Executive Officers and the financial metrics used in our compensation programs.

In fiscal year 2013, we continued to grow our total revenue. For the fiscal year ended November 30, 2013, our total revenue was $1,070.0 million, an increase of 4.4 percent over fiscal year 2012. While we achieved a record level of revenue, we fell below our growth target of 15.75 percent. In addition, our non-GAAP earnings per share declined on a year-over-year basis. Our fiscal year 2013 financial results were a key factor in the compensation decisions and outcomes for the fiscal year.

Despite our fiscal year 2013 results, we have delivered strong long-term total stockholder returns. While our total stockholder return over the past year was negative 3.5 percent, we delivered strong long-term returns of 23.1 percent and 399.4 percent over the past three and five years (measured as of November 30, 2013), respectively. In addition, our five-year returns have out-performed both the NASDAQ Composite Index and the S&P Information Technology Index. Despite our continued growth, we fell below our targets for both revenue and profitability. Our Named Executive Officers failed to earn any performance-based compensation during fiscal year 2013 as a result.

Our executive compensation program is designed to pay for performance. In fiscal year 2013, 50 percent of our Chief Executive Officer’s compensation package was performance-based. The performance-based component of the compensation received by our other Named Executive Officers who were executive officers at the beginning of the fiscal year averaged 48 percent of their total compensation. The performance-based compensation for our executives consists of cash incentive awards and equity awards, both of which would not be earned unless certain performance goals are achieved. The performance goals for fiscal year 2013 in both the annual cash incentive plan and in the equity awards to the Named Executive Officers other than the CEO were not achieved. The performance-based equity award granted in fiscal year 2013 to our Chief Executive Officer has a performance goal based on fiscal years 2013 through 2015 performance and therefore cannot be earned prior to the completion of the performance period in fiscal year 2015.

In addition, a significant portion of our executive compensation program consists of long-term compensation subject to long-term vesting requirements. In fiscal year 2013, 86 percent of our Chief Executive Officer’s compensation was long-term while an average of 70 percent of our other Named Executive Officers’ compensation was long-term in nature. Of this long-term compensation, 50 percent is subject to performance goals and may never be realized if the performance goals are not met.

 

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The Compensation Committee continually reviews the compensation programs for our Named Executive Officers to ensure they achieve the desired goals of aligning our executive compensation structure with our stockholders’ interests and current market practices. We have programs that align the compensation of our executives with the interests of our stockholders and manage compensation risk including:

 

  ·  

stock ownership guidelines;

 

  ·  

an independent Compensation Committee;

 

  ·  

the use by our Compensation Committee of an independent compensation consultant; and

 

  ·  

compensation recoupment or clawback provisions in our executive compensation program, as described under “Compensation Discussion and Analysis—Executive Summary—Compensation Governance below.

We are asking our stockholders to indicate their support for our Named Executive Officer compensation as described in this proxy statement. This proposal allows our stockholders the opportunity to express their views on our Named Executive Officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we will ask our stockholders to vote for the following resolution:

“RESOLVED, that TIBCO’s stockholders approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed in its Proxy Statement for the 2014 Annual Meeting of Stockholders pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, and the other related disclosure.”

 

 
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT.

 

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AUDIT COMMITTEE REPORT

The Audit Committee oversees our financial reporting process on behalf of the Board of Directors. The Audit Committee is responsible for providing independent, objective oversight of our accounting functions and internal controls and performing related functions as described above under “Board of Directors—Board Committees.” In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed the audited consolidated financial statements contained in our Annual Report on Form 10-K for fiscal year 2013 with management, including a discussion of the quality of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in such financial statements.

The Audit Committee is responsible for recommending to the Board of Directors that our consolidated financial statements be included in our Annual Report on Form 10-K. In that regard, the Audit Committee discussed with our independent auditors those matters the auditors communicated to and reviewed with the Audit Committee under applicable auditing standards, including information regarding the scope and results of the audit. In addition, the Audit Committee has discussed with the independent auditors their independence from management and the Audit Committee and has received the written disclosures and the letter from the independent auditors required by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) regarding the independent auditor’s communications with the audit committee concerning independence.

The Audit Committee discussed with our independent auditors the overall scope and plans for their audit. The Audit Committee also discussed with our independent auditors the matters set forth in Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU Section 380), as adopted by the PCAOB in Rule 3200T. The Audit Committee met with our independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of our internal controls, and the overall quality of our financial reporting. The Audit Committee reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of our audited consolidated financial statements with generally accepted accounting principles, their judgments as to the quality of our accounting principles, and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards.

The Audit Committee reviewed and discussed with management and our independent auditors the evaluation of TIBCO’s internal controls.

Finally, the Audit Committee reviewed and discussed with management and the independent auditors our audited consolidated balance sheets at November 30, 2013 and 2012 and our statements of operations, cash flows, stockholders’ equity, and comprehensive income for fiscal years 2013, 2012 and 2011. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors, and the Board of Directors approved, the inclusion of the audited consolidated financial statements in our Annual Report on Form 10-K for fiscal year 2013 as filed with the SEC.

AUDIT COMMITTEE OF THE

BOARD OF DIRECTORS

Eric C.W. Dunn

Narendra K. Gupta

Philip K. Wood

The information contained in the report above shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent specifically incorporated by reference therein.

 

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PROPOSAL FOUR:

RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

The Board of Directors has appointed PricewaterhouseCoopers LLP as our independent auditors for the fiscal year ending November 30, 2014. PricewaterhouseCoopers LLP has been our independent auditor since we were established as a separate entity in 1997. A representative of PricewaterhouseCoopers LLP will be present at the Annual Meeting; will be given the opportunity to make a statement, if he or she desires; and will be available to respond to appropriate questions.

The Audit Committee has conditioned its appointment of PricewaterhouseCoopers LLP as our independent auditors upon the receipt of an affirmative vote of a majority of the shares of common stock present in person or represented by proxy and entitled to be voted at the Annual Meeting. In the event that the stockholders do not ratify the appointment of PricewaterhouseCoopers LLP, the Audit Committee will reconsider its selection.

Fees Paid to the Independent Auditors

The following table sets forth fees paid to PricewaterhouseCoopers LLP, our independent auditors, for fiscal years 2013 and 2012.

 

     Fiscal Year
2013
     Fiscal Year
2012
 

Audit Fees

   $ 2,599,000       $ 2,621,000   

Audit-Related Fees

     151,000         639,000   

Tax Fees

     1,400,000         1,572,000   

All Other Fees

     1,159,000         519,000   
  

 

 

    

 

 

 

Total

   $ 5,309,000       $ 5,351,000   
  

 

 

    

 

 

 

Audit Fees consist of professional services rendered for the audit of our consolidated financial statements; the review of our interim consolidated financial statements included in quarterly reports; and services provided in connection with comfort letters, consents and statutory and regulatory filings.

Audit-Related Fees consist of assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.” These services include due diligence in connection with our acquisitions; other accounting consultations in connection with transactions, including our debt offering; attest services that are not required by statute or regulation; and consultations concerning financial accounting and reporting standards.

Tax Fees consist of professional services rendered for tax advice, planning and compliance (domestic and international). These services include the preparation and review of income tax returns, VAT tax returns and international returns and assistance regarding transfer pricing; VAT matters; federal, state and international tax compliance; acquisitions; and international tax planning.

All Other Fees consist of permissible professional consulting services rendered unrelated to the performance of the audit or review of our consolidated financial statements, and a subscription for a proprietary reference library.

Audit Committee Pre-Approval of Audit and Non-Audit Services of the Independent Auditors

The Audit Committee adopted a policy that mandates that the Audit Committee approve all audit and non-audit services provided by the independent auditors in advance. These services may include audit services, audit-related services, tax services and all other services. Pre-approval is generally provided for up to one year, and any

 

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pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The Audit Committee may delegate pre-approval authority to one or more of its members when expedited services are necessary. During fiscal years 2012 and 2013, all services were pre-approved by the Audit Committee in accordance with this policy and applicable SEC regulations.

 

 
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT AUDITORS FOR FISCAL YEAR 2014.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to the beneficial ownership of our common stock, as of February 7, 2014, of:

 

  ·  

each person or entity who we know to beneficially own five percent or more of the outstanding shares of our common stock;

 

  ·  

each director and nominee for the Board;

 

  ·  

our Chief Executive Officer, our Chief Financial Officer and each executive officer named in the Summary Compensation Table below; and

 

  ·  

all of our current directors and executive officers as a group.

Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person, and the percentage ownership of that person, shares of common stock subject to stock options held by that person that are currently exercisable or exercisable within 60 days of February 7, 2014, are deemed outstanding. Such shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person.

Unless otherwise indicated below, the address of each beneficial owner listed in the table is c/o TIBCO Software Inc., 3303 Hillview Avenue, Palo Alto, California 94304. The percentages in the table below are based on 161,820,477 shares of our common stock outstanding as of February 7, 2014. Except as indicated in the footnotes to this table and pursuant to applicable community property laws, to our knowledge, each stockholder named in the table has sole voting and investment power with respect to the shares set forth opposite such stockholder’s name. The information provided in this table is based on our records and information filed with the SEC, unless otherwise noted.

 

Name

   Common
Stock
Beneficially
Owned1,2
     Percentage
Ownership3
 

Five Percent Stockholders:

     

BlackRock, Inc.4

     18,839,952         11.6

The Vanguard Group5

     8,303,873         5.1

Directors and Executive Officers:

     

Vivek Y. Ranadivé6

     13,184,782         8.0

Nanci E. Caldwell7

     162,200         *   

Eric C.W. Dunn8

     231,000         *   

Narendra K. Gupta9

     259,063         *   

Peter J. Job10

     333,610         *   

David J. West11

     0         *   

Philip K. Wood12

     388,805         *   

Murray Rode13

     475,172         *   

Matthew Langdon14

     145,597         *   

Murat Sonmez15

     430,937         *   

William Hughes16

     370,225         *   

Peter Lee17

     367,879         *   

Sydney Carey18

     373,174         *   

All current directors and executive officers as a group (13 persons)19

     16,805,123         10.1

 

 

* Less than one percent of our outstanding shares of common stock.

 

1

For directors and executive officers, this column includes, where applicable, vested restricted stock units issued under our 2008 Equity Incentive Plan and our TIBCO Software Inc. 2009 Deferred Compensation Plan, and any restricted stock units under such plans that vest within 60 days of February 7, 2014. Some of

 

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these restricted stock units may have been deferred under the terms of each plan and will be distributed to the directors and executive officers in accordance with the terms of such restricted stock unit grant, each plan and such director or executive officer’s election under such plan, as applicable.

 

2 The SEC deems a person to have beneficial ownership of all shares that he or she has the right to acquire within 60 days. The shares indicated include, where applicable, shares underlying stock options exercisable within 60 days of February 7, 2014.

 

3 For purposes of calculating the Percentage Ownership, shares that the person or entity had a right to acquire within 60 days of February 7, 2014 are deemed to be outstanding when calculating the Percentage Ownership of such person or entity, but are not deemed to be outstanding for the purpose of calculating the Percentage Ownership of any other person or entity.

 

4

Based on a Schedule 13G/A filed with the SEC on January 10, 2014 by Blackrock, Inc. (“Blackrock”). Blackrock is the reported beneficial owner of all of the reported shares, has sole dispositive power over all such shares and sole voting power over 17,975,300 of such shares. Blackrock’s address is 40 East 52nd Street, New York, NY 10022.

 

5 Based on a Schedule 13G filed with the SEC on February 13, 2014 by The Vanguard Group (“Vanguard”). Vanguard is the beneficial owner of all of the reported shares, and has sole voting power over 95,105 shares, sole dispositive power over 8,216,868 and shared dispositive power over 87,005 shares. Vanguard’s address is 100 Vanguard Blvd., Malvern, PA 19355.

 

6 Includes 2,350,000 shares owned by various trusts for the benefit of Mr. Ranadivé’s children and descendants. Mr. Ranadivé is a co-trustee of the trusts and disclaims beneficial ownership of all shares held by the trusts. Includes 4,003,512 shares subject to options that vest within 60 days of February 7, 2014.

 

7 Includes 17,000 shares related to restricted stock units for which Ms. Caldwell has deferred receipt until her service end date with us. Includes 100,000 shares subject to options that vest within 60 days of February 7, 2014 and 17,000 shares of restricted stock units that are expected to vest on April 3, 2014, the date of our annual meeting.

 

8 Includes 57,000 shares related to restricted stock units for which Mr. Dunn has deferred receipt until (i) March 2014 with respect to 20,000 shares, (ii) his service end date with us with respect to 20,000 shares and (iii) January 2015 with respect to 17,000 shares. Includes 80,000 shares subject to options that vest within 60 days of February 7, 2014 and 17,000 shares of restricted stock units that are expected to vest on April 3, 2014, the date of our annual meeting.

 

9 Includes 8,063 shares owned by a trust for the benefit of Dr. Gupta and his spouse. Includes 74,000 shares related to restricted stock units for which Dr. Gupta has deferred receipt until his service end date with us. Includes 160,000 shares subject to options that vest within 60 days of February 7, 2014 and 17,000 shares of restricted stock units that are expected to vest on April 3, 2014, the date of our annual meeting.

 

10 Does not include 20,511 shares related to restricted stock units for which Mr. Job has deferred receipt until April 2014 as, under the tax rules of the United Kingdom, Mr. Job will not have voting rights on such shares until the deferral date is reached. Includes 160,000 shares subject to options that vest within 60 days of February 7, 2014 and 17,000 shares of restricted stock units that are expected to vest on April 3, 2014, the date of our annual meeting.

 

11 Mr. West was appointed to our Board of Directors on February 27, 2014.

 

12 Does not include 54,000 shares related to restricted stock units for which Mr. Wood has deferred receipt until (i) April 2014 with respect to 20,000 share, (ii) December 2015 with respect to 17,000 shares and (iii) December 2016 with respect to 17,000 shares as, under the tax rules of the United Kingdom, Mr. Wood will not have voting rights on such shares until the deferral date is reached. Includes 260,000 shares subject to options that vest within 60 days of February 7, 2014 and 17,000 shares of restricted stock units that are expected to vest on April 3, 2014, the date of our annual meeting (the receipt of which will be deferred by Mr. Wood until October 2017).

 

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13 Includes 2,999 shares of common stock owned by Mr. Rode’s spouse and 11,818 shares owned by a trust for the benefit of Mr. Rode and his family. Mr. Rode is a co-trustee of the trust. Includes 89,063 shares subject to options that vest within 60 days of February 7, 2014.

 

14 Includes 33,171 shares subject to options that vest within 60 days of February 7, 2014.

 

15 Includes 60,764 shares subject to options that vest within 60 days of February 7, 2014.

 

16 Includes 48,092 shares subject to options that vest within 60 days of February 7, 2014.

 

17 Mr. Lee resigned as our Executive Vice President, Analytics and Customer Loyalty on January 24, 2014. We have provided his ownership information based solely on a review of publicly available data and information still retained by us. Includes 8,969 shares subject to options that vest within 60 days of February 7, 2014.

 

18 Ms. Carey resigned as our Executive Vice President, Chief Financial Officer on April 19, 2013. We have provided her ownership information based solely on a review of publicly available data and information still retained by us.

 

19 Includes all shares described in the notes above, with the exception of Mr. Lee and Ms. Carey, as they are not current executive officers for the reasons described above. Includes 218,000 shares related to restricted stock units for which Mr. Laffey, Ms. Caldwell, Mr. Dunn and Dr. Gupta, collectively, have deferred receipt. Includes 4,309,952 shares subject to options that vest within 60 days of February 7, 2014.

 

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COMPENSATION DISCUSSION AND ANALYSIS

This section describes and analyzes the compensation objectives, policies and practices in fiscal year 2013 for our named executive officers (collectively, the “Named Executive Officers”) as determined under SEC rules.

Executive Summary

Our compensation program is designed to align the interests of our executives with those of our stockholders. The Compensation Committee has designed our executive compensation program to reward performance that meets or exceeds established financial goals that, if achieved, would result in increased stockholder value. In line with our pay-for-performance compensation philosophy, the total compensation received by our executives varies based on individual and corporate performance measured against annual and long-term goals. Our Named Executive Officers’ compensation package consists primarily of base salary, annual cash incentive awards and long-term equity incentive awards. We believe that the mix of compensation afforded to our executives combines competitive levels of compensation and rewards for superior performance and aligns relative compensation with the achievement of essential corporate goals that include revenue growth, operating profitability and increased stockholder value.

Our fiscal year 2013 executive compensation program includes the following features:

 

  ·  

Pay for Performance.    Half of our Chief Executive Officer’s and 48 percent of our other Named Executive Officers’ compensation was “at-risk” and based on reasonable but rigorous performance targets. In fiscal year 2013, performance targets were not reached and, as a result, no performance-based compensation was earned by our Named Executive Officers. Our Chief Executive Officer’s performance-based equity award for fiscal year 2013 contains a three-year performance period and cannot be earned prior to the completion of fiscal year 2015.

 

  ·  

Emphasis on Long-Term Performance.    Our compensation program places a strong emphasis on our long-term performance by providing approximately 86 percent of the Chief Executive Officer’s and 70 percent of our other Named Executive Officers’ compensation in the form of long-term equity awards that are subject to performance and vesting requirements. The Compensation Committee believes that the current design of the executive incentive programs delivered the intended long-term performance results, as manifested by the Company’s long-term returns of 23.1 and 399.4 percent over the three- and five-year performance periods, significantly above the NASDAQ Composite Index and the S&P Information Technology Index.

 

  ·  

Extended Vesting Requirements on Equity.    All equity awards, including both time-based and performance-based equity, are subject to service-based vesting to ensure retention of the executives and optimal alignment of their interests with the interests of stockholders.

 

  ·  

Robust Stock Ownership Guidelines.    Our Named Executive Officers are subject to robust stock ownership guidelines, including 1 million shares for our Chief Executive Officer, which based on our stock price on February 27, 2014, was equivalent to 3,702 percent of his base salary.

 

  ·  

Limited Non-Performance Based Elements of Compensation.    Our Named Executive Officers receive base salaries generally between the 25th and 50th percentile of our peer group. In addition, half of the equity compensation received by our executives is time-based.

 

  ·  

Limited Executive Perquisites.    Our executives are eligible to participate in broad-based benefit plans that are available to our employees and do not receive any additional perquisites.

 

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Fiscal Year 2013 Financial Performance

In fiscal year 2013, we continued to grow our total revenue. Despite our continued growth, we fell below our targets for both revenue and profitability. The compensation received by our Named Executive Officers declined as a result. The financial metrics used in designing our executive compensation programs for fiscal year 2013 were as follows:

 

     Fiscal Year
2013
 

Total Revenue (in millions)

   $ 1,070.0   

Non-GAAP Operating Profits Before Tax (“OPBT”)

     23.3

Non-GAAP Earnings Per Share

   $ 1.06   

For the fiscal year ended November 30, 2013, our total revenue was $1,070.0 million, an increase of 4.4 percent over fiscal year 2012. While we achieved a record level of revenue, we fell below our growth target of 15.75 percent. In addition, our non-GAAP earnings per share declined on a year-over-year basis. “Non-GAAP Operating Profits Before Tax” is derived as the percentage change in our non-GAAP net income. “Non-GAAP net income” means our net income, excluding (i) amortization of intangible assets, (ii) stock-based compensation, (iii) acquisition related and other costs, (iv) restructuring costs, and (v) the income tax effects of the preceding adjustments. Our fiscal year 2013 financial results were a key factor in the compensation decisions and outcomes for the fiscal year.

Despite our fiscal year 2013 results, we have delivered strong long-term total stockholder returns. While our total stockholder return over the past year was negative 3.5 percent, we delivered strong long-term returns of 23.1 percent and 399.4 percent over the past three and five years (measured as of November 30, 2013), respectively. In addition, our long-term returns have out-performed both the NASDAQ Composite Index and the S&P Information Technology Index.

 

LOGO

 

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Fiscal Year 2013 Executive Performance Compensation Results

A significant portion of the compensation package for our Named Executive Officers in fiscal year 2013 was comprised of performance-based compensation, consistent with our pay-for-performance philosophy. The three primary components of our executive compensation program are base salary, annual cash incentive awards and long-term equity awards. As a result of our financial performance in fiscal year 2013, our Named Executive Officers earned no performance-based compensation during the year.

In fiscal year 2013, we failed to meet the performance threshold in the 2013 Executive Incentive Compensation Plan (the “2013 EICP”), our executive cash incentive award plan. As a result, no awards were earned pursuant to the 2013 EICP.

The table below shows the amounts actually paid to each Named Executive Officer pursuant to the 2013 EICP and the threshold, target and maximum amounts payable upon achievement of the financial targets, excluding the discretionary component.

Fiscal Year 2013 EICP

 

    Mr. Ranadivé     Mr. Langdon     Ms. Carey     Mr. Rode     Mr. Sonmez     Mr. Hughes     Mr. Lee  

Threshold Payment Under the 2013 EICP

  $ 238,040      $ 98,000      $ 120,000      $ 160,000      $ 131,200      $ 121,600      $ 128,000   

Target Payment Under the 2013 EICP

  $ 595,100      $ 245,000      $ 300,000      $ 400,000      $ 328,000      $ 304,000      $ 320,000   

Maximum Payment Under the 2013 EICP

  $ 1,130,690      $ 465,500      $ 570,000      $ 760,000      $ 623,200      $ 577,600      $ 608,000   

Actual Payment Under the 2013 EICP

  $ 0      $ 0      $ 0      $ 0      $ 0      $ 0      $ 0   

In fiscal year 2013, our Named Executive Officers who were executive officers at the beginning of the fiscal year received performance-based restricted stock units (“PRSU”). Our Chief Executive Officer’s PRSU has a performance goal based on fiscal years 2013 through 2015 performance and therefore cannot be earned prior to the completion of the performance period in fiscal year 2015. The other Named Executive Officers received PRSUs that set a performance goal based on total revenue for fiscal year 2013. We failed to meet the performance target in the PRSU for fiscal year 2013 and, as a result, no shares were earned and the PRSUs were canceled. The table below shows the grant date fair value of the PRSU eligible to be earned in fiscal year 2013 and the amount actually earned.

Fiscal Year 2013 PRSU

 

    Mr. Ranadivé     Mr. Rode     Mr. Sonmez     Mr. Hughes     Ms. Carey  

Total Value of the 2013 PRSU at Target

  $ 3,753,750      $ 858,000      $ 750,750      $ 536,250      $ 643,500   

Value of 2013 PRSU Eligible to be Earned in 2013

  $ 0      $ 858,000      $ 750,750      $ 536,250      $ 643,500   

Actual Value of 2013 PRSU Earned in 2013

  $ 0      $ 0      $ 0      $ 0      $ 0   

Key Features of Our Fiscal Year 2013 Executive Compensation Program

Pay for Performance

Our fiscal year 2013 compensation program reflects our pay-for-performance philosophy. We believe that structuring our compensation program to pay for performance aligns the interests of our executive officers with those of our stockholders. We consider the annual cash incentive awards and the performance-based stock awards to be “performance-based” because the value of these awards is dependent on the achievement of pre-established financial metrics.

 

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Our Chief Executive Officer’s Pay for Performance Over Time.    The correlation between our Chief Executive Officer’s compensation and our stock price over the past five years supports this belief. The compensation reflected in the chart below includes our Chief Executive Officer’s base salary, cash incentive awards and the grant date fair value of equity awards at target levels of performance. The realized value of such equity awards may differ materially from the grant date fair value as fluctuations in our stock price performance can increase or decrease the value of the equity compensation and the amount of equity earned pursuant to performance-based awards may be above or below target levels.

Chief Executive Officer Pay-For-Performance

 

LOGO

Performance-based Equity Awards.    In fiscal year 2013, most of our Named Executive Officers received equity-based incentive awards in the form of performance-based stock awards and time-based restricted stock awards. The two Named Executive Officers who were appointed as executive officers during the second half of fiscal year 2013 were ineligible to receive performance-based stock as those awards are granted in the beginning of each fiscal year.

The performance-based equity compensation for our executives is subject to performance goals and will not be earned unless those performance goals are achieved. The performance-based stock awarded to our Chief Executive Officer during fiscal year 2013 has a three-year performance period and will be earned only if the cumulative total revenue target for fiscal years 2013 through 2015 is met. The performance-based stock awarded during fiscal year 2013 to the other Named Executive Officers contained performance goals for fiscal year 2013. The performance goals for fiscal year 2013 for these equity awards were not achieved and as a result, no shares were earned and the awards were canceled.

Performance-based Portion of Compensation.    For fiscal year 2013, 50 percent of our Chief Executive Officer’s compensation package was performance-based at target. In addition, the performance-based component of the compensation package for our Named Executive Officers who were executive officers at the beginning of the fiscal year averaged 48 percent of the total compensation package. The following charts show the percentages of our Chief Executive Officer and the other Named Executive Officers’ fiscal year 2013 compensation, excluding those Named Executive Officers who were not executive officers at the beginning of fiscal year 2013.

 

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The charts include the grant date fair value of the performance-based stock awarded at target levels of achievement and the annual cash incentive award at target amounts.

 

CEO Compensation Components

At Target

  

Other Named Executive Officers

Compensation Components

At Target

LOGO    LOGO

Alignment of Executives’ Interests with Stockholders’ Interests

We believe that our executive compensation program should align the interests of our executives with those of our stockholders. In addition to linking pay with performance, we believe that providing long-term compensation to our Named Executive Officers is in our stockholders’ best interests. Accordingly, not only does our executive compensation program emphasize performance-based compensation but we also emphasize long-term compensation.

For fiscal year 2013, 86 percent of our Chief Executive Officer’s compensation was long-term in nature at target while 70 percent of our other Named Executive Officers’ compensation was long-term in nature at target. We consider equity compensation to be long-term compensation because it is subject to vesting over multiple years and the value of these awards is directly linked to the performance of our stock while salary and our annual cash incentive awards are short-term compensation. We included the grant date fair value of all equity awards made during fiscal year 2013 as long-term compensation, including the grant date fair value of the performance-based stock at target level of achievement pursuant to the performance-based restricted stock units awarded during fiscal year 2013. Of the long-term compensation granted during fiscal year 2013, 50 percent of the total value was in the form of performance-based stock that may never be realized if the performance goals are not met. The following charts show the portions of our Chief Executive Officer and the other Named Executive Officers’ compensation consisting of long-term pay (in the form of equity awards) versus short-term pay at target levels.

 

Chief Executive Officer

Long-Term Compensation

  

Other Named Executive Officers

Long-Term Compensation

LOGO    LOGO

 

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Base Salary

The base salaries of our Named Executive Officers were raised in fiscal year 2013 because our compensation philosophy is to provide base salaries between the 25th and the 50th percentile of our peer group and our base salaries were well below those levels. The increases to base salaries in fiscal year 2013 brought base salary levels for the Named Executive Officers over the 25th percentile of our peer group although base salary levels remain below the 50th percentile of our peer group for all but one Named Executive Officer.

Annual Cash Incentive Awards

Annual cash incentive awards for executives in fiscal year 2013 were determined pursuant to the 2013 EICP. The performance goals in the 2013 EICP were revenue growth and non-GAAP operating profit targets. Pursuant to the 2013 EICP, the annual revenue growth target was 15.75 percent and the annual non-GAAP operating profit target was 27 percent. In fiscal year 2013, TIBCO’s actual revenue growth was 4.4 percent and the actual non-GAAP operating profit was 23.3 percent. Based on our financial results, no awards were earned pursuant to the 2013 EICP.

Long-Term Equity Awards

We granted a combination of PRSU and time-based restricted stock to our Named Executive Officers who were executive officers at the beginning of fiscal year 2013. The two Named Executive Officers who were appointed as executive officers during the second half of fiscal year 2013 were ineligible to receive performance-based stock as those awards are granted in the beginning of each fiscal year. The terms of the equity awards received by our Named Executive Officers in fiscal year 2013 are as follows:

 

  ·  

Chief Executive Officer Performance-Based Restricted Stock Units.    The purpose of the PRSU is to align the interests of management with the long-term interest of stockholders by focusing management on growing our total revenue. The awards pursuant to the PRSU are the right to receive future grants of restricted stock units based on achievement of financial performance goals. In fiscal year 2013, our Chief Executive Officer received a PRSU (the “CEO PRSU”) with a cumulative total revenue target for fiscal years 2013 through 2015. Under the CEO PRSU, the target number of restricted stock units will be earned if cumulative total revenue for fiscal years 2013 through 2015 is $4.092 billion. The CEO PRSU also allows our CEO to earn up to an additional 100 percent of the target number of restricted stock units for greater cumulative total revenue between the target and $4.883 billion or greater. Since the CEO PRSU has a three-year performance period, no restricted stock units can be earned until the completion of fiscal year 2015.

 

  ·  

Named Executive Officer Performance-Based Restricted Stock Units.    In fiscal year 2013, our Named Executive Officers received a PRSU (the “NEO PRSU”) with a total revenue growth target for fiscal year 2013 of 16 percent. Based on our financial results, the NEO PRSU target was not met and, as a result, the NEO PRSU awards were cancelled and no restricted stock units were earned.

 

  ·  

Time-Based Restricted Stock.    In an effort to balance the risk associated with the grants awarded under the PRSU, the Compensation Committee awarded half of the total equity compensation package to the Named Executive Officers in the form of restricted stock. The restricted stock is subject to time-based vesting and provides on-going retention value even in the event that the performance targets set in the PRSU are not achieved. Based on the target number of restricted stock units pursuant to the PRSU, the Named Executive Officers received an equal amount of PRSUs and time-based restricted stock. The Compensation Committee believes that this provides an appropriate mix of equity and is consistent with the aggressive stock ownership requirements in place for our Named Executive Officers. Pursuant to our stock ownership guidelines, our Chief Executive Officer must hold 1 million shares while our Executive Vice Presidents must each hold 50,000 shares.

 

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Compensation Governance

Our compensation program is based on our compensation governance framework and our pay-for-performance philosophy, including the following features:

 

  ·  

The Compensation Committee is comprised solely of independent directors.

 

  ·  

The Compensation Committee’s independent compensation consultant, Radford, an AON Hewitt Company (“Radford”), is retained directly by the Compensation Committee and performs no services directly for us other than to provide compensation surveys to our Human Resources department.

 

  ·  

Stock ownership guidelines are designed to align the interests of our directors and executives with those of our stockholders.

 

  ·  

The Compensation Committee conducts a review of compensation-related risk. In conducting its review, the Compensation Committee evaluated our executive compensation program and major broad-based compensation programs for all employees and concluded that it does not believe that our programs create risks that are reasonably likely to have a material adverse effect on TIBCO. When evaluating our executive compensation program, the Compensation Committee considers whether the program is based on the appropriate philosophy, benchmarked against the appropriate peer group and balanced between long and short-term performance targets, company and individual performance.

 

  ·  

All equity awards and cash incentive awards are subject to clawback provisions that allow the Compensation Committee to rescind awards and require our Section 16 officers to reimburse us for amounts earned if the officer was engaged in “Detrimental Activity” or, in certain cases, relating to a restatement of our financial statements as a result of an intentional, willful or negligent act of any of our employees.

Compensation Committee Responsibilities and Authority

Our Compensation Committee reviews and establishes the compensation for our Chief Executive Officer and the other Named Executive Officers, each of our Section 16 officers and, when appropriate, certain other employees. The Compensation Committee’s responsibilities also include, among other duties, the responsibility to:

 

  ·  

review and approve the compensation and compensation policies for our executive officers;

 

  ·  

review and approve all forms of compensation to be provided to our Section 16 officers;

 

  ·  

review the compensation of non-employee directors and make recommendations to the Board of Directors for changes thereto;

 

  ·  

review and make recommendations to the Board of Directors regarding other incentive compensation plans for the provision of compensation to other officers;

 

  ·  

oversee the management of risks associated with our compensation policies and programs; and

 

  ·  

review and discuss with management our disclosures to be included in each annual proxy statement and annual report on Form 10-K regarding executive compensation, including our disclosures under “Compensation Discussion and Analysis.”

Our Compensation Committee reviews and approves the annual salary and annual cash incentive awards as well as all long-term equity incentive awards for each Section 16 officer consistent with the terms of any applicable employment arrangements; administers our equity plans; consults with management regarding compensation and benefits for our non-executive officers and other employees (as appropriate); and oversees our compensation and benefits plans, policies and programs generally. Our Compensation Committee establishes our compensation plans and specific compensation levels for our Chief Executive Officer and the other Section 16 officers.

 

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The Compensation Committee has the authority to engage its own advisors directly, including any compensation consultant, independent legal counsel or other advisors. In accordance with this authority, the Compensation Committee has engaged Radford as its compensation consultant since October 2006. The Compensation Committee retains and does not delegate any of its exclusive power to determine all matters of executive compensation and benefits.

Compensation Philosophy and Objectives

Our Compensation Committee believes that an effective compensation program should reward achievement of specific corporate goals and align our executives’ interests with those of our stockholders by rewarding performance that meets or exceeds established goals. Our compensation programs are designed to motivate our executive officers to achieve or exceed corporate goals that enhance stockholder value and enable us to attract and retain key employees. Our executive compensation program is designed to reward superior performance and to achieve the following overall objectives:

 

  ·  

Compensation Should Align the Interests of our Executives with our Stockholders.    Compensation should link the interests of management with those of stockholders by making a substantial portion of executive compensation depend upon our financial performance;

 

  ·  

Compensation Should be Competitive.    Compensation levels should be sufficiently competitive to attract and retain superior executives by providing them with the opportunity to earn total compensation packages that are competitive in the industry;

 

  ·  

Compensation Should be Based on Performance.    Compensation should reward corporate and individual results by recognizing performance through salary, annual cash incentives and long-term incentives; and

 

  ·  

Compensation Should Reflect Responsibility and Accountability.    Compensation should be based on the level of skill, knowledge, effort and responsibility needed to perform the job successfully.

The cornerstone of our compensation program is to pay for performance. Our Compensation Committee sets performance targets for our executives. A significant portion of the total compensation of our executives is performance-based, contingent on meeting annual and long-term corporate performance goals. Our Compensation Committee also believes that restricted stock awards to executives, combined with our stringent stock ownership requirements, reflect our focus on pay-for-performance because the value of such awards is directly tied to the value of our stock, thereby providing award recipients with incentives to increase the value of our stock. We believe these equity awards are beneficial in aligning management and stockholder interests, and consequently increasing stockholder value.

Our compensation philosophy for our executives emphasizes performance-based and long-term compensation. Under our compensation philosophy, we target each of base salary and total cash compensation for our executives from the 25th to the 50th percentile of our peer group. In addition, a significant portion of the total cash compensation is performance-based. We target our long-term equity compensation at the 50th percentile of our peer group and a significant proportion of the long-term equity compensation consists of performance-based equity that provides compensation only when performance targets have been met. Our performance-based equity awards provide the opportunity to deliver compensation at the 75th percentile if stretch performance targets are met. The Compensation Committee sets performance objectives for equity awards at levels designed to deliver corporate performance at the 75th percentile of our peer group. As a result of our emphasis on performance-based compensation, the Compensation Committee may sometimes make equity grants to our executives containing long-term performance goals that it believes would result in performance far exceeding our peer group. It is possible for the target total compensation of our executives to be at the 90th percentile of our peer group in these extraordinary circumstances.

 

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Roles of the Chief Executive Officer and the Compensation Consultant

Role of the Chief Executive Officer

Our Chief Executive Officer makes recommendations to the Compensation Committee with respect to compensation for other executive officers, including the structure and terms of these executives’ annual cash incentives and long-term equity incentives. Our Chief Executive Officer considers factors such as tenure, individual performance, responsibilities and experience levels of the executives, as well as the compensation of the executives relative to one another, when making recommendations regarding appropriate total compensation of our executives. Certain executives assist the Chief Executive Officer in structuring his proposals regarding the design of the annual cash incentives and long-term equity incentives; however, executives do not play any role in setting their own compensation. Our Chief Executive Officer either discusses his recommendations with the Chairman of the Compensation Committee or has management present them at Compensation Committee meetings. During fiscal year 2013, our Executive Vice President, General Counsel & Secretary regularly attended the Compensation Committee meetings to provide perspectives on the competitive landscape, the needs of the business and information about our financial performance. The Compensation Committee periodically meets in executive session without management to deliberate on executive compensation matters. The Compensation Committee considers, but is not bound to and does not always accept, the Chief Executive Officer’s recommendations regarding executive compensation. The Compensation Committee reviews all recommendations in light of our compensation philosophy and generally seeks input from Radford prior to making any final decisions.

Role of the Compensation Consultant

Our Compensation Committee has engaged Radford directly as its outside compensation consultant to advise the Compensation Committee on all matters related to executive compensation. The Compensation Committee has adopted a Compensation Consultant Policy that sets forth guidelines designed to ensure the independence of the compensation consultant. Pursuant to this policy, management may work with Radford on matters for the Compensation Committee where the Compensation Committee requests such work. Management reports to the Compensation Committee at least annually regarding all services and fees paid to Radford. Other than providing compensation surveys to the Company’s Human Resources department, Radford provides no services directly to TIBCO.

Radford is engaged directly by the Compensation Committee. Representatives of Radford attend Compensation Committee meetings, review meeting materials and provide advice to the Compensation Committee upon its request. For example, Radford provides data to the Compensation Committee on trends and issues in executive compensation, assists in determining the appropriate peer group against which to compare executive compensation, compares our executive compensation levels against our peer group and comments on the competitiveness and reasonableness of our executive compensation program. In addition, Radford assists the Compensation Committee in the development of our Executive Incentive Compensation Plan and other long-term incentive plans, including commenting on performance targets. The Compensation Committee evaluates the independence of its compensation consultant annually based on the independence factors set forth by the Securities and Exchange Commission.

Peer Group Selection

One of the primary goals of our executive compensation program is to establish compensation practices and levels based on the practices of companies in our peer group, consistent with our philosophy of providing our executives with competitive compensation. Our Compensation Committee, with Radford’s assistance, identified a peer group of public companies comprised of software, software and hardware, Internet and software as a service or cloud based companies, to use in benchmarking our executive compensation. The Compensation Committee reviews the companies included in the peer group and our selection criteria annually and makes changes in connection with mergers and acquisitions and based on changes in the marketplace.

 

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In fiscal year 2013, we used trailing twelve-month revenue and market capitalization as guidelines for selecting the companies in our peer group. The companies in our peer group are publicly traded companies with twelve-month revenue or market capitalization, or both, between 0.3 and 3.0 times ours at the time the peer group was established. We may include companies that do not fit these criteria if we believe that we are directly competing with such companies for executive talent. Our Compensation Committee believes it is important to benchmark compensation against our peer group because we directly compete with these companies to hire executive talent. When establishing the fiscal year 2013 executive compensation program, our Compensation Committee identified the following peer group:

 

Adobe Systems Incorporated   NetApp, Inc.    salesforce.com
Akamai Technologies, Inc.   Nuance Communications, Inc.    Solera Holdings, Inc.
Citrix Systems, Inc.   Parametric Technology Corporation    Splunk Inc.
Informatica Corporation   Pegasystems, Inc.    Synopsys Inc.
Intuit Inc.   Qlik Technologies Inc.    VeriSign, Inc.
LinkedIn Corporation   Red Hat, Inc.   

The companies included in the peer group differ from those listed in the indices used to prepare our stock price performance graph, which can be found in our 2013 Annual Report to Stockholders. The Compensation Committee found that, based on input from management and Radford, the companies listed in the peer group more closely represent the labor markets in which we compete for executive talent. At the time the Compensation Committee established the peer group for the fiscal year 2013 executive compensation program, we were at the 40th percentile of our peer group in terms of revenue and the 35th percentile in terms of market capitalization. Based on the Company’s relative decline within the peer group during fiscal year 2013, the Compensation Committee removed some of the larger companies such as Adobe Systems Incorporated and Intuit Inc. from the peer group for fiscal year 2014.

Stockholder Vote

At our 2013 Annual Meeting of Stockholders, our stockholders approved, in an advisory vote, the compensation of our Named Executive Officers, as disclosed in the Compensation Discussion and Analysis, the compensation tables and the related disclosures in our proxy statement. The proposal was approved by our stockholders with 96 percent of the votes cast voting “for” approval and one percent voting “against” approval. In light of the level of approval by our stockholders, the Compensation Committee did not make changes to our compensation policies or practices specifically in response to the stockholder vote.

Components of Executive Compensation

The compensation program for our executive officers consists of the following:

 

  ·  

Base salary

 

  ·  

Annual cash incentive awards

 

  ·  

Long-term equity incentive awards

 

  ·  

Benefits

 

  ·  

Cash bonuses or equity grants as retention tools

 

  ·  

Severance and change in control protection

Base Salary

Base salary is determined by the executive’s performance, responsibilities, the salary range for comparable positions within our peer group and the executive’s individual qualifications and experience. Base salaries are

 

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reviewed annually and may be adjusted by our Compensation Committee in accordance with certain criteria which include individual performance; levels of responsibilities; individual competencies, skills and contributions; functions performed; peer group compensation levels for comparable positions; internal compensation equity issues; and our general financial performance. Our Chief Executive Officer proposes base salary amounts for the Compensation Committee’s consideration based on his evaluation of individual performance and expected future contributions; a review of survey data to ensure competitive compensation against the peer group; and a comparison of the base salaries of the executive officers who report directly to the Chief Executive Officer to ensure internal equity. The Compensation Committee retains the discretion to provide base salary increases in the event that an executive officer is appointed to a position of increased responsibility. The weight given each factor by the Compensation Committee may vary with each individual.

As discussed above, we believe that a significant portion of an executive’s compensation should be based on our performance. Accordingly, our policy is to target and pay base salary levels for executive officers between the 25th and the 50th percentile of our peer group. Targeting this range for base salary allows us to allocate a larger portion of total compensation to variable performance-based compensation while still offering enough fixed pay to maintain a stable management team and attract competent executive talent. In addition, by setting a range as our target, we are able to adjust compensation levels in the event that our position within the peer group changes after the peer group is established. Actual base salaries for our Named Executive Officers were generally between the 25th and the 50th percentile of our peer group in fiscal year 2013.

Annual Cash Incentive Awards

Our annual cash incentive awards provide our employees, including our Named Executive Officers, the opportunity to obtain cash bonuses at the end of each fiscal year based upon the achievement of corporate and individual performance goals. It is our philosophy to place a large proportion of the executive’s total annual cash compensation at risk and directly dependent upon the achievement of pre-established corporate and individual performance goals. Consistent with our pay-for-performance philosophy, our Compensation Committee believes that annual cash incentive awards should potentially equal or exceed base salary when corporate performance exceeds established goals.

Annual cash incentive awards to our Named Executive Officers are paid pursuant to our Executive Incentive Compensation Plan or “EICP.” The goal of the EICP is to pay higher than market average total compensation for excellent annual performance. We target total cash compensation levels (base salary and annual cash incentive awards) between the 25th and the 50th percentile of our peer group when we meet our annual corporate performance goals. Target total cash compensation for our Named Executive Officers was generally between the 25th and the 50th percentile of our peer group in fiscal year 2013. A significant portion of the total potential cash compensation for our Named Executive Officers was contingent on the achievement of the performance metrics set in the EICP, consistent with our pay-for-performance objectives. Cash incentive awards are based upon the achievement of the financial performance objectives set by our Compensation Committee. Under the EICP, the Compensation Committee has discretion to increase or reduce awards if the Compensation Committee believes circumstances warrant such adjustment. Additionally, under the EICP the Compensation Committee retains discretion to award the Named Executive Officers a bonus of up to 20% of base salary, taking into account considerations such as TIBCO’s performance compared to its plan or its peer group. Our Compensation Committee believes such awards motivate our executive officers to address annual performance goals, using more immediate measures for performance than those reflected in the appreciation in the value of our stock. EICP awards are based on a pre-determined percentage of the executive’s base salary, dependent upon the achievement during the fiscal year of certain performance goals set by our Compensation Committee, and subject to the Compensation Committee’s discretion. The Compensation Committee typically establishes both revenue growth and operating income before taxes targets for the EICP. Because there are two separate tests for determining payouts to our executive officers under the EICP, it is often difficult for us to meet both targets. When the Compensation Committee reviewed our financial performance on these measures relative to our peer group, it found that most companies were able to meet one of the measures but that few companies were able to achieve results in both categories at or above the 50th percentile. Due to the

 

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difficulty of achieving two financial metrics simultaneously, in only one of the three years during fiscal years 2011 through 2013, were we able to meet both targets, and our EICP has paid at or above such target in only one of the three years.

Long-Term Equity Incentive Awards

Our equity compensation program typically consists of three components: equity awards upon commencement of employment with TIBCO, annual equity awards for continuing employees and performance-based equity awards. Equity awards made to new employees are typically granted in the form of restricted stock or restricted stock units. Annual equity awards to our executive officers are typically in the form of restricted stock, restricted stock units, or some combination. Performance-based equity awards may be granted as part of our annual equity program or may be granted with multi-year performance metrics to align our executives’ interests with our corporate goals. Long-term equity incentive awards are granted pursuant to our 2008 Equity Incentive Plan (the “Plan”). Long-term equity incentive awards to executive officers are based on job responsibilities and potential for individual contribution, with reference to the levels of total direct compensation (total cash compensation plus the value of long-term equity incentive awards) of executives at our peer companies. When it makes new grants, the Compensation Committee also considers the retention value of previous equity grants.

Our Compensation Committee believes that granting equity to management is beneficial in aligning management and stockholder interests by focusing executives on increasing stockholder value, which in turn increases the value of the awards. Our Compensation Committee manages our equity compensation program with the goal of maintaining a low annual dilution rate against a backdrop of increasing headcount, while providing an equity vehicle that allows us to attract, motivate and retain the talent critical to achieving our corporate goals. Our overhang was 11.8 percent at the end of our 2013 fiscal year. Overhang is defined as the number of outstanding stock options and unvested equity awards, divided by the number of common shares outstanding. For purposes of our overhang calculation, we exclude the shares available for issuance pursuant to our deferred compensation plan, as those shares would be issued only upon deferral of cash compensation equal to the fair market value of the shares.

Awards of restricted stock and restricted stock units to new employees typically vest over a four year period with 50 percent vesting on the second anniversary of the grant date and the remainder vesting annually thereafter. Awards of restricted stock and restricted stock units to existing employees as annual equity awards typically vest annually over four years at a rate of 25 percent per year.

Annual Equity Awards

Annual equity awards are based on guidelines that provide for awards commensurate with position levels and that reflect grant practices within our peer group. Equity awards to our Named Executive Officers typically include a combination of performance-based equity and time-based restricted stock.

We target annual long-term equity incentive awards between the 50th and the 75th percentile of our peer group, subject to adjustment by the Compensation Committee based on the criteria described below. Consequently, individual employees may receive equity awards above or below approved guidelines. The principal factors the Compensation Committee considers in determining the amount of the long-term equity awards for our executive officers are prior performance, contributions to TIBCO, level of responsibility, value of other compensation, the executive officer’s ability to influence our long-term growth and profitability, and the retention value of prior equity awards. The Plan does not provide any quantitative method for weighing these factors, and a decision to grant an equity award is primarily based upon the Compensation Committee’s evaluation of past as well as future anticipated performance.

 

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Performance-Based Equity Awards

Performance-based equity awards may be granted by the Compensation Committee to reward achievement of specific goals. The Compensation Committee believes that the use of performance-based equity awards encourages participants to focus on achievement of specific objectives and can be a valuable component of executive compensation. For example, performance-based equity awards may have a multi-year performance period that can create long-term retention incentives and motivate executives to increase stockholder value over a longer period than annual compensation. In addition, the Compensation Committee may award performance-based equity to our executives as a component of their annual equity awards. The Compensation Committee grants performance-based equity consistent with its pay-for-performance philosophy.

Benefits

Executives are able to participate in broad-based employee benefit plans that are available to employees in the country where the executive resides. In the United States, where all of the Named Executive Officers reside, employee benefits include company matching in our 401(k) plan, medical and dental insurance, life insurance and our employee stock purchase plan. In addition, we maintain a deferred compensation plan (the “DCP”) that allows certain executives and our non-employee directors to defer certain cash compensation into restricted stock units in accordance with Section 409A of the Code. We do not make any matching contributions to participants in the DCP.

Cash Bonuses or Equity Grants as a Retention Tool

Occasionally, our Compensation Committee grants cash or equity awards for the purpose of encouraging certain executives to remain with TIBCO. In situations where our Chief Executive Officer determines that this type of award is necessary or appropriate for the continued success of our long-term goals or overall retention, he discusses the rationale for the grant with our Executive Vice President, General Counsel to determine the appropriate form and size of the grant. The recommendation is discussed with the Compensation Committee’s compensation consultant who provides input in preparation for making the recommendation to the Compensation Committee as well as input directly to the Compensation Committee chairman. Retention bonuses and equity grants include vesting or clawback provisions that are designed to encourage recipients to maintain their employment with us into the future. These provisions may differ from our standard vesting schedules.

Severance and Change in Control

We believe that severance protections, particularly in the context of a change in control transaction, can play a valuable role in attracting and retaining executive officers. Accordingly, we provide such protections for our executives under a Change in Control and Severance Plan (the “Change in Control Plan”) and for our Chief Executive Officer in his employment agreement. Our Compensation Committee evaluates the level of change in control benefits provided to our executives, and in general, we consider these protections an important part of an executive’s compensation and consistent with competitive practices.

As described in more detail below under the section entitled “Executive Compensation—Severance and Change in Control Arrangements,” our executives would be entitled under their agreement or the Change in Control Plan, as applicable, to severance benefits in the event of a termination of employment in connection with a change in control of TIBCO. We believe that the occurrence, or potential occurrence, of a change in control transaction would create uncertainty regarding the continued employment of our executive officers. This uncertainty results from the fact that many change in control transactions cause significant organizational changes, particularly at the senior executive level. In order to encourage certain of our executive officers to remain employed during an important time when their prospects for continued employment following the transaction are often uncertain, we provide our executives with enhanced severance benefits if their employment is terminated without cause or the executive resigns for good reason in connection with a change in control. Because we believe that a termination by the executive for good reason may be conceptually the same as a

 

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termination by an acquiror without cause, and because we believe that in the context of a change in control, potential acquirors would otherwise have an incentive to constructively terminate the executive’s employment to avoid paying severance, we believe it is appropriate to provide severance benefits in these circumstances. In addition, pursuant to current market practices, our Chief Executive Officer would be entitled under his agreement to additional severance benefits if terminated without cause or if he resigns for good reason other than in connection with a change in control.

Fiscal Year 2013 Executive Compensation

A significant portion of the compensation received by our Named Executive Officers in fiscal year 2013 consisted of performance-based, long-term compensation.

Fiscal Year 2013 Base Salary

In fiscal year 2013, the base salaries of our Named Executive Officers were raised because our compensation philosophy is to provide base salary at between the 25th and the 50th percentile of our peer group and our base salaries were generally below or near the 25th percentile. These increases brought base salary levels for most of our Named Executive Officers over the 25th percentile of our peer group although base salary levels remain below the 50th percentile of our peer group for all but one Named Executive Officer. Our Chief Operating Officer’s base salary was raised above the 50th percentile because the scope of his responsibility extends beyond that of a typical Chief Operating Officer. Our current Chief Financial Officer’s base salary was increased upon his appointment as Chief Financial Officer. The Compensation Committee set his base salary below the 25th percentile of our peer group based on his experience at the time of his promotion.

Fiscal Year 2013 Annual Cash Incentive Awards

Our 2013 EICP was designed to reward our executives for our achievement of specified levels of corporate financial performance and their individual performance during fiscal year 2013. The Compensation Committee set targets in line with our corporate goal of growing revenue while maintaining strong operating profit margins in fiscal year 2013. Consequently, our 2013 EICP set two components as the bases for determining 2013 annual incentive awards. These components are the attainment of goals related to:

 

  ·  

Revenue growth; and

 

  ·  

Non-GAAP operating profit before tax.

The target established in the 2013 EICP for revenue growth was a 15.75 percent increase in total revenue in fiscal year 2013 over fiscal year 2012 and 27 percent non-GAAP operating profit before tax. Non-GAAP operating profit before tax excludes gains and losses on equity investments, costs related to formal restructuring plans or acquisition activities, stock-based compensation related to employee equity awards, the amortization of acquired intangible assets and charges for acquired in-process research and development, and the income tax effects of the foregoing, as well as adjustments for the impact of changes in the valuation allowance recorded against TIBCO’s deferred tax assets. The Compensation Committee also set a threshold for performance under the 2013 EICP below which no bonuses would be paid. For the 2013 EICP, the threshold below which no bonuses would be paid was one of the following combinations: (a) increased revenue of 10 percent and non-GAAP operating profits before tax of 27 percent or (b) increased revenue of 15.75 percent and non-GAAP operating profits before tax of 25 percent. In addition, the Compensation Committee also set a maximum achievement level for both revenue growth and non-GAAP operating profit before tax. For the 2013 EICP, the maximum achievement level was one of the following combinations: (a) an increase in revenue of 30 percent and non-GAAP operating profits before tax greater than 29 percent or (b) an increase in revenue of 25 percent and non-GAAP operating profits before tax greater than 31 percent. Pursuant to the 2013 EICP, if we achieved both revenue growth and non-GAAP operating profits before tax levels above the maximum, the 2013 EICP provided that the Compensation Committee would have discretion to set the award amounts. In addition, the

 

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Compensation Committee had discretion to vary payments either above or below the levels achieved pursuant to the terms of the 2013 EICP.

In establishing the financial targets for the 2013 EICP, the Compensation Committee reviewed an analysis of the relative revenue growth and operating income before taxes as a percent of revenue of our peer group and TIBCO’s financial plan for the 2013 fiscal year. The Compensation Committee conducted the review of our financial performance relative to our peer group to ensure that financial performance targets under the 2013 EICP were at levels that reward above market performance and were sufficiently difficult to achieve.

Each executive officer was assigned a target annual incentive award level, expressed as a percent of annual base salary. For fiscal year 2013, our Named Executive Officers who were Executive Vice Presidents were eligible for target awards equal to 80 percent of base salary if the target levels of corporate financial performance were achieved and awards equal to 152 percent of base salary if the maximum levels of corporate financial performance were achieved. Our Named Executive Officer who was a Senior Vice President (which was Mr. Langdon) was eligible for target awards equal to 70 percent of base salary if the target levels of corporate financial performance were achieved and awards equal to 133 percent of base salary if the maximum levels of corporate financial performance were achieved. Our Chief Executive Officer was eligible for target awards equal to 100 percent of base salary if the target levels of corporate financial performance were achieved and awards equal to 190 percent of base salary if the maximum levels of corporate financial performance were achieved. Consequently, assuming that the target level of corporate financial performance for the 2013 EICP was met, approximately 44 percent of each Named Executive Officer’s (other than our Chief Executive Officer) and 50 percent of our Chief Executive Officer’s total cash compensation was “at-risk” compensation contingent on the attainment of our goals. Based on the target annual incentive award levels, the total target cash compensation levels for our Named Executive Officers (other than our Chief Executive Officer) ranged from below the 25th to the 50th percentile of our peer group.

With respect to individual performance, the Compensation Committee believes that it is appropriate to reward individual performance that has benefited and/or promoted our business strategies. Under the terms of the 2013 EICP, the Compensation Committee could approve a discretionary incentive award of up to 20 percent of each Named Executive Officer’s base salary. This component of the 2013 EICP allows the Compensation Committee to take into account factors that may have affected the level of achievement where targets are not achieved or to consider a specific individual’s contribution during the year, and is not related to our Compensation Committee’s discretion in setting award amounts if we exceed the maximum level set forth in the EICP for both revenue growth and operating profits components. In addition, where achievement of multiple performance goals would otherwise be necessary for a minimum payout, the discretionary component allows the Compensation Committee to recognize and reward an individual’s continued efforts and strong performance through the end of the fiscal year notwithstanding the fact that achievement of one or more goals was not possible. The Compensation Committee believes that the discretionary components further the goals of our compensation program to reward individual performance and provide reasonable compensation that is competitive and provides retention value. In the absence of the discretionary components, the Compensation Committee would be confined to a purely quantitative approach, which could work against the goals of our compensation program by failing to reward strong individual performance.

In fiscal year 2013, we failed to meet the threshold in the 2013 EICP and no discretionary bonuses were awarded. As a result, no awards were earned pursuant to the 2013 EICP.

 

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The table below shows the amounts actually paid to each Named Executive Officer pursuant to the 2013 EICP and the threshold, target and maximum amounts payable upon achievement of the financial targets, excluding the discretionary component.

 

    Mr. Ranadivé     Mr. Langdon     Ms. Carey     Mr. Rode     Mr. Sonmez     Mr. Hughes     Mr. Lee  

Threshold Payment Under the 2013 EICP

  $ 238,040      $ 98,000      $ 120,000      $ 160,000      $ 131,200      $ 121,600      $ 128,000   

Target Payment Under the 2013 EICP

  $ 595,100      $ 245,000      $ 300,000      $ 400,000      $ 328,000      $ 304,000      $ 320,000   

Maximum Payment Under the 2013 EICP

  $ 1,130,690      $ 465,500      $ 570,000      $ 760,000      $ 623,200      $ 577,600      $ 608,000   

Actual Payment Under the 2013 EICP

  $ 0      $ 0      $ 0      $ 0      $ 0      $ 0      $ 0   

Fiscal Year 2013 Long-Term Equity Incentive Awards

In fiscal year 2013, our Named Executive Officers received annual equity awards in the forms of performance-based restricted stock units and time-based restricted stock. To determine the size of the annual equity awards, the Compensation Committee, with the assistance of Radford, compared the long-term equity incentive compensation levels of our executives with similar positions within our peer group to determine the long-term equity incentive compensation amount for each executive. The Compensation Committee evaluated the total value delivered by the annual equity grant against the 50th to the 75th percentile of the value of long-term incentive compensation of our peer group. In finalizing the amounts of the fiscal year 2013 annual equity awards, the Compensation Committee considered factors such as our Chief Executive Officer’s recommendations, the burn rate and expense of the executive grants, and the value of outstanding unvested equity awards then held by each executive, including the performance-based equity awards, and the degree to which those values are aligned with our retention goals.

Performance-Based Equity Awards

In fiscal year 2013, the Compensation Committee granted the annual equity awards to our Named Executive Officers in equal amounts of performance-based restricted stock units (“PRSUs”) (at achievement of target performance goals), other than Mr. Langdon and Mr. Lee (who were not executive officers at the time of the grant) and time-based awards in the form of restricted stock. The Compensation Committee believes that this mix of components, including the emphasis on PRSUs, further enhances the pay-for-performance nature of our executive compensation program because the PRSUs are subject to performance conditions based on our financial performance. Further, the Compensation Committee believes that granting a mix of equity to our executives provides the appropriate balance between performance, risk and retention.

The awards pursuant to the PRSU are the right to receive grants of stock units subject to achievement of performance-based objectives and continued employment with us over a specified period. In fiscal year 2013, our Chief Executive Officer received a PRSU (the “CEO PRSU”) that set performance goals based on cumulative total revenue for fiscal years 2013 through 2015. The Compensation Committee believes that setting performance goals over multiple years encourages the Chief Executive Officer to focus on sustained, long-term revenue growth, consistent with stockholder interests. Pursuant to the CEO PRSU, the target award will be earned if our cumulative total revenue for fiscal years 2013 through 2015 is $4.092 billion with the possibility of earning additional awards for greater achievement with the maximum shares earned if cumulative total revenue is $4.883 billion or greater. In addition to achievement of the cumulative total revenue targets, no shares may be earned unless cumulative non-GAAP earnings per share (“Non-GAAP EPS”) for the performance period is at least $4.19. If the performance metrics are met, then 50 percent of the shares earned will vest immediately with the remaining shares vesting on the one-year anniversary of the date earned. Because the performance period for the CEO PRSU is a multi-year period, no shares could be earned during fiscal year 2013.

 

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In fiscal year 2013, our Named Executive Officers who were executive officers at the beginning of the fiscal year received PRSUs (the “NEO PRSU”) that set a performance goal based on total revenue for fiscal year 2013. Pursuant to the NEO PRSU, the target award would have been earned if our total revenue for fiscal year 2013 had grown by 16 percent over fiscal year 2012 with the possibility of earning additional awards for greater achievement with the maximum shares earned if total revenue had grown by 19 percent or greater. In addition to achievement of the total revenue target, no shares would be earned unless Non-GAAP EPS for fiscal year 2013 had grown by at least 10 percent. If the performance metrics had been met, then 25 percent of the shares earned would have vested immediately with the remaining shares vesting over three years. In fiscal year 2013, we failed to meet both the total revenue goal and the Non-GAAP EPS goal and, as a result, the NEO PRSU were cancelled and no shares were earned pursuant thereto.

For purposes of the PRSU, “Non-GAAP EPS” means our consolidated GAAP net income at the point of measurement adjusted for: (i) stock-based compensation expense; (ii) amortization and impairment of acquired intangible assets; (iii) acquisition related charges incurred after the issuance of a signed or definitive term sheet that include third party legal, banker, accounting, other advisory fees and severance costs for terminated employees of the acquired company for employees that are terminated within 90 days of the acquisition date for completed, in process or uncompleted transactions; (iv) fair value deferred revenue adjustments in accordance with business combination standards that are at least five (5) million dollars or greater from acquisitions (per acquisition); (v) non-cash expenses incurred in connection with the impairment or write-off of goodwill, in-process research and development or any other intangible assets; (vi) costs related to approved restructuring activities that are separately disclosed in our GAAP financial statements; (vii) litigation settlements and third party legal expenses associated with litigation settlements; (viii) gains and losses on equity investments; (ix) other non-recurring extraordinary items that are separately disclosed in our GAAP financial statements; (x) non-cash interest income and expense; (xi) adjustments for changes in the valuation allowance recorded against our deferred tax assets in accordance with GAAP; and (xii) the income tax effects of the preceding adjustments; divided by diluted GAAP shares.

During fiscal year 2013, the PRSUs awarded to the Named Executive Officers during fiscal years 2012 and 2013 were outstanding. The following tables set forth the grant date fair value of the PRSUs granted in fiscal years 2012 and 2013 at target, the amount that could have been earned if the performance goals for fiscal year 2013 were met and the amount actually earned in fiscal year 2013 pursuant to the PRSUs:

Fiscal Year 2012 PRSU

 

    Mr. Ranadivé     Mr. Langdon     Ms. Carey     Mr. Rode     Mr. Sonmez     Mr. Hughes     Mr. Lee  

Total Value of the 2012 PRSU at Target

  $ 5,171,250      $ 821,100      $ 738,750      $ 886,500      $ 886,500      $ 664,875      $ 1,368,500   

Value of 2012 PRSU Eligible to be Earned in 2013

  $ 2,327,063      $ 541,926      $ 487,575      $ 585,090      $ 585,090      $ 438,818      $ 903,210   

Actual Value of 2012 PRSU Earned in 2013

  $ 0      $ 0      $ 0      $ 0      $ 0      $ 0      $ 0   

Fiscal Year 2013 PRSU

 

    Mr. Ranadivé     Mr. Langdon     Ms. Carey     Mr. Rode     Mr. Sonmez     Mr. Hughes     Mr. Lee  

Total Value of the 2013 PRSU at Target

  $ 3,753,750        —        $ 643,500      $ 858,000      $ 750,750      $ 536,250        —     

Value of 2013 PRSU Eligible to be Earned in 2013

  $ 0        —        $ 643,500      $ 858,000      $ 750,750      $ 536,250        —     

Actual Value of 2013 PRSU Earned in 2013

  $ 0        —        $ 0      $ 0      $ 0      $ 0        —     

 

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Time-Based Equity Awards

In fiscal year 2013, the Compensation Committee awarded a portion of the annual equity award to our Named Executive Officers in the form of time-based restricted stock. The Compensation Committee granted restricted stock to those Named Executive Officers who received a PRSU to balance the risk associated with the PRSU. The restricted stock provides on-going retention value even in the event the performance metrics in the PRSU are not achieved. The restricted stock vests over four years, subject to continued employment. Based on the target number of restricted stock units pursuant to the PRSU, the Named Executive Officers received an equal amount of PRSUs and time-based restricted stock. The two Named Executive Officers who were not executive officers at the beginning of fiscal year 2013 when the PRSU grants were made received their annual equity awards in the form of time-based restricted stock. During fiscal year 2013, in connection with his promotion to Executive Vice President, Analytics and Customer Loyalty, Peter Lee was awarded 200,000 shares of restricted stock as his annual equity award. This award was forfeited by Mr. Lee upon his resignation. The Compensation Committee set the size of his award to enhance his overall unvested equity compensation position for retention purposes.

Fiscal Year 2013 Cash Retention Bonus and Equity Grant

The Compensation Committee granted a one-time cash retention bonus of $300,000 to Mr. Langdon upon his appointment as Chief Financial Officer in July 2013. This bonus was in recognition of Mr. Langdon’s new position and to have him relocate closer to our headquarters. Pursuant to the terms of the cash retention bonus, Mr. Langdon must repay the entire bonus if, prior to July 15, 2014, he either fails to relocate to the San Francisco Peninsula area or he resigns, gives notice of resignation or is terminated for Cause. In the event that Mr. Langdon resigns, gives notice of resignation or is terminated for Cause between July 15, 2014 and July 15, 2015, he will be obligated to repay one-half of the bonus. Mr. Langdon also received a restricted stock award of 15,000 shares that are scheduled to vest in equal installments annually over four years, subject to his continued employment with us. This award supplemented previous awards made to Mr. Langdon in 2013 and was intended to address the Compensation Committee’s retention objectives.

Fiscal Year 2013 Chief Executive Officer Compensation

Mr. Ranadivé has served as our Chief Executive Officer and Chairman of the Board since our inception in January 1997. The terms of Mr. Ranadivé’s employment are subject to an employment agreement. Mr. Ranadivé entered into an amended and restated employment agreement in 2012 in connection with the expiration of his previous employment agreement. The amended and restated employment agreement provides for, among other things, annual compensation of: (i) $575,000 base salary for fiscal year 2012 subject to future adjustments based on our standard practices; and (ii) an annual target bonus of 100 percent of base salary. Mr. Ranadivé’s employment agreement also contains severance and change in control provisions that are described in the section entitled “Executive Compensation—Severance and Change in Control Arrangements.”

In fiscal year 2013, our Chief Executive Officer’s base salary was raised by 3.5 percent to $595,100. The Compensation Committee increased the base salary of our Chief Executive Officer because our compensation philosophy is to provide base salary between the 25th and the 50th percentile of our peer group and his base salary was at the 25th percentile. Despite the increase during fiscal year 2013, our Chief Executive Officer’s base salary remains around the 25th percentile of our peer group. In fiscal year 2013, as part of our annual equity awards, Mr. Ranadivé received an award of 175,000 PRSU (with a maximum potential award of 350,000 shares) and 175,000 restricted stock units.

The target set forth in the 2013 EICP for our Chief Executive Officer was 100 percent of his base salary. Accordingly, our Chief Executive Officer’s target total cash compensation for fiscal year 2013 was below the 25th percentile of our peer group. In fiscal year 2013, we failed to meet the threshold set forth in the 2013 EICP. As a result, no awards were paid pursuant to the 2013 EICP.

 

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Compensation Policies and Practices

Equity Grant Practices

Our equity award policy sets forth the procedures for granting equity awards. Under our policy, the Compensation Committee must approve all grants. Equity grants to new employees have a grant date of the 15th day of the second month in the fiscal quarter following the new employee’s hire date. All other grants generally have a grant date of when the grant is approved by the Compensation Committee. The grant price is the closing price of our common stock on the grant date. We do not have a program, plan or practice of timing equity award grants in conjunction with the release of material non-public information. We strive to make equity awards while our trading window is open. If an award is proposed while the trading window is closed, assuming other required approvals are in place, our General Counsel must review the circumstances of the grant prior to issuance.

Executive and Director Stock Ownership Guidelines

The Compensation Committee believes that it is important to align the financial interests of our senior leadership with those of our stockholders by requiring executives to make a direct investment in holding our shares. Accordingly, we adopted stringent stock ownership guidelines for our Chief Executive Officer, our Executive Vice Presidents and our non-employee directors. The stock ownership guidelines are set as a number of shares and may be reevaluated and revised from time to time based on changes in our common stock or other factors. Individuals subject to the stock ownership guidelines will have until the later of February 2014 or five years from the date such person becomes subject to the guidelines to meet their ownership requirement.

The current stock ownership guidelines for our participants are as follows:

 

Position

   Number of Shares Required to Own  

Chief Executive Officer

     1,000,000   

Executive Vice President

     50,000   

Non-employee Director

     20,000   

Shares that count towards satisfaction of the stock ownership guidelines include:

 

  ·  

Shares owned outright by the participant or his or her immediate family members residing in the same household;

 

  ·  

Shares held in trust for the benefit of the participant or his or her family;

 

  ·  

Restricted stock or restricted stock units where the restrictions have lapsed; and

 

  ·  

Vested restricted stock units subject to tax deferral.

Equity instruments that do not count towards satisfaction of the stock ownership guidelines include:

 

  ·  

Unvested restricted stock;

 

  ·  

Unvested restricted stock units; and

 

  ·  

Unexercised stock options.

As of February 2014, each of our Named Executive Officers to whom the February 2014 deadline applied had met the ownership requirements.

 

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Stock Burn Rate

The Compensation Committee periodically reviews our gross and net burn rates, compared to our peer group and the broader industry as summarized by Radford. The Compensation Committee monitors our equity burn rate and takes into consideration our burn rate compared to peer companies and the broader industry averages when reviewing recommendations for the annual equity awards pool to be distributed to employees. The Compensation Committee endeavors to ensure that our net burn rate approximates the average rate within our peer group as well as the average rates within broader industry groups, and that the annual and the three-year average gross burn rates are below the guidelines set by independent shareholder advisory groups such as Institutional Shareholder Services (“ISS”). During fiscal year 2013, the net shares issued pursuant to our equity plans totaled 5,810,582, and the gross shares issued totaled 6,749,109 (in both cases, including shares earned upon the achievement of performance goals in outstanding performance-based equity awards). There were 163,131,509 shares outstanding at November 30, 2013, resulting in a net burn rate of 3.61 percent and a gross burn rate of 4.2 percent. Net burn rate is defined as the sum of all equity awards granted plus all shares earned pursuant to performance-based restricted stock units during the period less all equity awards that are cancelled and returned during the period, divided by the shares outstanding at the end of the period. Gross burn rate is defined as the sum of all equity awards granted plus all shares earned pursuant to performance-based restricted stock units during the period, divided by the shares outstanding at the end of the period. In addition, using current ISS methodology, our three-year gross burn rate is well within the burn rate limit of 7.25% applied to our industry by ISS.

Tax Implications of Executive Compensation

Section 162(m) limits to $1 million the amount of annual compensation that we may deduct when paid to a Named Executive Officer who is a “covered employee” within the meaning of Section 162(m). The regulations allow us to deduct compensation over $1 million if it is performance-based provided certain requirements, such as stockholder approval, are satisfied. Our Plan was approved by our stockholders. Accordingly, stock options and performance-based restricted stock units granted pursuant to the Plan can be excluded from the $1 million limit. Time-based restricted stock and restricted stock unit awards are not considered performance-based and, as such, would not be deductible to the extent that the value of such awards, upon vesting, when aggregated with other non-deductible compensation, exceeds $1 million.

The Compensation Committee considers the deductibility of compensation to its executives when reviewing and structuring compensation programs and attempts to maintain full deductibility to the extent consistent with our overall compensation goals. However, the Compensation Committee may make payments that are not fully deductible if it believes that such payments promote the best long-term interests of our stockholders.

Section 409A of the Code

Section 409A of the Code imposes additional significant taxes in the event that an executive officer, director or service provider receives “deferred compensation” that does not satisfy the requirements of Section 409A. Section 409A applies to certain of our severance arrangements. Consequently, to assist in avoiding additional tax under Section 409A, we have amended the severance arrangements described below in a manner intended to either avoid the application of Section 409A or, to the extent doing so is not possible, comply with the applicable Section 409A requirements. In addition, we adopted the DCP in February 2009. The DCP allows certain executives and our non-employee directors to defer certain cash compensation into restricted stock units in accordance with Section 409A.

 

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COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Board of Directors has reviewed and discussed the section entitled “Compensation Discussion and Analysis” of this Proxy Statement with management. Based on this review and discussion, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

Philip K. Wood

Peter J. Job

Nanci E. Caldwell

The information contained in the report above shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent specifically incorporated by reference therein.

 

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RISK ASSESSMENT OF COMPENSATION PLANS

The Compensation Committee reviewed our compensation programs, including executive compensation and major broad-based compensation programs for all employees. Based on our review, we have determined that our compensation programs do not, individually or in the aggregate, encourage executives or employees to undertake unnecessary or excessive risks that are reasonably likely to have a material adverse effect on us. As part of this review, the Compensation Committee engaged Radford to assist with the risk assessment of TIBCO’s executive compensation programs. Radford advised that our executive compensation programs are established using appropriate pay philosophy, peer group and market positioning to achieve our compensation objectives while mitigating risk. Radford also advised that our executive compensation programs are structured with an effective balance of cash and equity, use of multiple performance metrics, short and long-term focus, and guaranteed versus at-risk compensation. Further, policies such as our stock ownership guidelines and the clawback provision in our current equity incentive plan mitigate our compensation risks. Additionally, the Compensation Committee considered the assessment of our major compensation programs for our non-executives globally. Based on this assessment, the Compensation Committee concluded that our programs do not create risks that are reasonably likely to have a material adverse effect on us. In conducting this assessment, management reviewed our compensation programs for non-executives both internally and with Radford and concluded that these programs do not encourage excessive risk taking.

 

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EXECUTIVE COMPENSATION

Summary Compensation Table

The narrative, table and footnotes below set forth information regarding the total compensation paid to our Chief Executive Officer, Chief Financial Officer and our other Named Executive Officers for fiscal years 2011, 2012 and 2013. The components of the compensation reported in the Summary Compensation Table are described below. For additional information on each component of the total compensation package, see “Compensation Discussion and Analysis.”

Salary

This column sets forth the total base salary earned by each of our Named Executive Officers for fiscal years 2011, 2012 and 2013.

Stock Awards

This column sets forth the aggregate grant date fair value of awards granted during the applicable fiscal year, computed in accordance with FASB ASC Topic 718, excluding any estimates of future forfeitures. The fair value of these grants is calculated using the closing price of our stock on the date of grant. Additional information regarding the awards is set forth in the tables entitled “Grants of Plan-Based Awards” and “Outstanding Equity Awards at Fiscal Year-End 2013.”

Option Awards

This column sets forth the aggregate amount of compensation costs recognized in the respective fiscal year for option awards granted to each of our Named Executive Officers in the current or prior fiscal years, computed in accordance with FASB ASC Topic 718, excluding any estimates of future forfeitures. Additional information regarding the awards is set forth in the tables entitled “Grants of Plan-Based Awards” and “Outstanding Equity Awards at Fiscal Year-End 2013.” For a discussion of the assumptions used to calculate the value of stock option awards, see Note 16 to our Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended November 30, 2013.

Non-Equity Incentive Plan Compensation

This column sets forth the cash awards earned by each of our Named Executive Officers during the respective fiscal year under our EICP. These amounts are paid in the fiscal year after the fiscal year in which they are earned. For more information about these awards, see the table entitled “Grants of Plan-Based Awards.”

 

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All Other Compensation

This column sets forth all other compensation received by each of our Named Executive Officers during the respective fiscal years not reported in the previous columns. Such amounts include company matching contributions to our 401(k) plan, life insurance and other perquisites.

Summary Compensation Table

 

Name and Principal Position

  Fiscal
Year
    Salary1
($)
    Bonus
($)
    Stock
Awards2
($)
    Option
Awards
($)
    Non-Equity
Incentive Plan
Compensation3
($)
    All
Other
Compens-

ation ($)
    Total ($)  

Vivek Y. Ranadivé

Chief Executive Officer and Chairman of the Board

   

 

 

2013

2012

2011

  

  

  

   
 
 
585,050
542,656
553,366
  
  
  
   

 

 

—  

—  

—  

  

  

  

   

 

 

7,507,500

10,342,500

4,204,000

  

  

  

   

 

 

—  

—  

2,930,000

  

  

  

   

 

 

—  

306,000

821,833

  

  

  

   

 

 

45,144

101,945

19,943

4 

  

  

   

 

 

8,137,694

11,293,101

8,529,142

  

  

  

Matthew Langdon

Senior Vice President, Chief Financial Officer

    2013        312,229        300,000        854,550        —          —          31,228 5      1,498,007   

Sydney Carey

Former Chief Financial Officer

   

 

 

2013

2012

2011

  

  

  

   
 
 
146,307
334,375
329,826
  
  
  
   

 

 

—  

—  

—  

  

  

  

   

 

 

1,287,000

1,477,500

724,012

6 

  

  

   

 

 

—  

—  

605,537

  

  

  

   

 

 

—  

175,000

400,000

  

  

  

   

 

 

4,474

34,729

10,000

  

  

  

   

 

 

1,437,781

2,021,604

2,069,375

  

  

  

Murray D. Rode

Executive Vice President, Chief Operating Officer

   

 

 

2013

2012

2011

  

  

  

   
 
 
450,000
370,642
368,261
  
  
  
   

 

 

—  

—  

—  

  

  

  

   
 
 
1,716,000
1,773,000
1,051,000
  
  
  
   

 

 

—  

—  

879,000

  

  

  

   

 

 

—  

200,000

425,000

  

  

  

   

 

 

10,000

43,196

10,000

7 

  

  

   
 
 
2,176,000
2,386,838
2,733,261
  
  
  

Murat Sonmez

Executive Vice President, Global Field Operations

   

 

 

2013

2012

2011

  

  

  

   
 
 
405,000
375,993
355,680
  
  
  
   

 

 

—  

—  

—  

  

  

  

   
 
 
1,501,500
1,773,000
1,167,788
  
  
  
   

 

 

—  

—  

976,663

  

  

  

   

 

 

—  

148,500

450,000

  

  

  

   

 

 

55,407

51,301

25,000

8 

  

  

   
 
 
1,961,907
2,348,794
2,975,131
  
  
  

William Hughes

Executive Vice President, General Counsel and Secretary

   

 

2013

2012

  

  

   
 
365,000
323,642
  
  
   

 

—  

—  

  

  

   
 
1,072,500
1,329,750
  
  
   

 

—  

—  

  

  

   

 

—  

160,000

  

  

   

 

12,004

11,764

10 

  

   
 
1,449,504
1,825,156
  
  

Peter Lee

Executive Vice President, Analytics and Customer Loyalty

    2013        355,000        55,601        4,440,000 9      —          —          29,287 11      4,879,888   

 

1 In fiscal year 2011 we changed our vacation policy, which resulted in payments being made to certain employees depending on the amount of accrued vacation held by each employee at the time of payment. These payments are added to the salary column above for fiscal year 2011, as applicable.

 

2 Represents the grant date fair value for awards of restricted stock and performance-based restricted stock units granted in fiscal year 2013 to each of the Named Executive Officers computed in accordance with FASB ASC Topic 718 at the target level, excluding any estimates of future forfeitures. For a discussion of the assumptions used to calculate the value of awards of restricted stock and the performance-based restricted stock units, see Note 16 to our Consolidated Financial Statements in the Form 10-K for the year ended November 30, 2013, as filed with the SEC. In December 2013, the Compensation Committee determined that the performance criteria with respect to such PRSUs had not been met, such that none of the executive officers earned performance-based restricted stock units with respect to the grants in fiscal year 2013, except for Mr. Ranadivé’s performance based restricted stock units, which have a 3-year performance period and still may be earned.

 

3 As described under “Compensation Discussion and Analysis—Fiscal Year 2013 Executive Compensation—Fiscal Year 2013 Annual Cash Incentive Awards” above, the Named Executive Officers’ annual cash incentive awards are derived based on our corporate financial performance with respect to pre-established objectives for the fiscal year and a discretionary component determined by our Compensation Committee. The target and maximum amounts for each Named Executive Officer are reported in the table entitled “Grants of Plan-Based Awards” below.

 

4 Consists of travel and related costs for Mr. Ranadivé and his guest to events attended on behalf of TIBCO.

 

5 Consists of $10,000 in matching contributions under our 401(k) plan and $21,228 of travel and related costs for Mr. Langdon and his guest to events attended on behalf of TIBCO.

 

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6 Ms. Carey resigned on April 19, 2013. Upon her resignation, Ms. Carey forfeited all of her outstanding and unvested stock awards. Ms. Carey did not realize any benefit from the restricted stock awards granted to her during fiscal year 2013, which was not scheduled to commence vesting, if at all, until December 2013, at the earliest. Nevertheless, the SEC’s disclosure rules require us to include a grant date fair value for this award in the Summary Compensation Table.

 

7 Consists of matching contributions under our 401(k) plan.

 

8 Consists of $10,000 in matching contributions under our 401(k) plan and $45,407 of travel and related costs for Mr. Sonmez and his guest to events attended on behalf of TIBCO.

 

9 Mr. Lee resigned on January 24, 2014. Upon his resignation, Mr. Lee forfeited all of his outstanding and unvested stock awards. Mr. Lee did not realize any benefit from the restricted stock award granted to him during fiscal year 2013, which was not scheduled to commence vesting until May 2014. Nevertheless, the SEC’s disclosure rules require us to include a grant date fair value for this award in the Summary Compensation Table.

 

10 Consists of $10,000 in matching contributions under our 401(k) plan and $2,004 in supplemental life insurance premiums that was paid directly by Mr. Hughes.

 

11 Consists of $10,000 in matching contributions under our 401(k) plan, $17,012 of travel and related costs for Mr. Lee and his guest to events attended on behalf of TIBCO and $2,276 in supplemental life insurance premiums that was paid directly by Mr. Lee.

Grants of Plan-Based Awards in Fiscal Year 2013

The following table sets forth information concerning restricted stock awards and performance-based restricted stock unit awards granted to our Named Executive Officers during fiscal year 2013, as well as potential threshold, target and maximum payouts under the EICP for fiscal year 2013.

Grants of Plan-Based Awards

 

Name

 

Type of Plan/
Award

 

Grant
Date

  Estimated Future Payouts
Under Non Equity Incentive
Plan Awards1
    Estimated Possible Payouts
Under Equity Incentive

Plan Awards2
    All Other
Stock
Awards:
Number
of Shares
of Stock
    All Other
Option
Awards:
Number of
Securities
Underlying
Options
  Exercise
or Base
Price of
Option
Awards
($/Sh)
  Grant Date
Fair Value
of Stock
and Option
Awards3
 
      Threshold     Target     Maximum     Threshold     Target(#)     Maximum          

Vivek Y. Ranadivé

  EICP     $ 238,040      $ 595,100 4    $ 1,130,690                 
 

PRSUs

  2/28/2013           175,000        175,000        350,000            $ 3,753,750   
 

Restricted Stock

  2/28/2013                 175,000          $ 3,753,750   

Matthew Langdon

 

EICP

    $ 98,000      $ 245,000      $ 465,500                 
 

Restricted Stock

  5/17/2013                 22,500          $ 499,500   
 

Restricted Stock

  7/15/2013                 15,000          $ 355,050   

Sydney Carey

 

EICP

    $ 120,000      $ 300,000      $ 570,000                 
 

PRSUs

  2/28/2013           30,000 5      30,000 5      37,500 5          $ 643,500   
 

Restricted Stock

  2/28/2013                 30,000 5        $ 643,500   

Murray D. Rode

 

EICP

    $ 160,000      $ 400,000      $ 760,000                 
 

PRSUs

  2/28/2013           40,000        40,000        50,000            $ 858,000   
 

Restricted Stock

  2/28/2013                 40,000          $ 858,000   

Murat Sonmez

 

EICP

    $ 131,200      $ 328,000      $ 623,200                 
 

PRSUs

  2/28/2013           35,000        35,000        43,750            $ 750,750   
 

Restricted Stock

  2/28/2013                 35,000          $ 750,750   

William Hughes

 

EICP

    $ 121,600      $ 304,000      $ 577,600                 
  PRSUs   2/28/2013           25,000        25,000        31,250            $ 536,250   
 

Restricted Stock

  2/28/2013                 25,000          $ 536,250   

Peter Lee

 

EICP

    $ 128,000      $ 320,000      $ 608,000                 
 

Restricted Stock

  5/17/2013                 200,000 6        $ 4,440,000   

 

1

These columns show the potential amount of the payment under the EICP if the threshold, target or maximum goals were satisfied for all performance measures, excluding a 20 percent discretionary factor. Under the terms of the EICP, the Compensation Committee may approve a discretionary incentive award of up to 20 percent of each executive officer’s base salary. The actual amounts earned by our Named Executive Officers pursuant to these awards are set forth in the Non-Equity Incentive Plan Compensation column of the table entitled “Summary

 

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Compensation Table.” For more information on these awards, including the performance goals and target percentages (as a percent of base salary) for determining payment under the EICP, see the section entitled “Compensation Discussion and Analysis.”

 

2 These amounts represent the potential number of performance-based restricted stock units payable pursuant to performance-based restricted stock units awarded in fiscal year 2013 to each of the Named Executive Officers if the threshold, target or maximum goals were satisfied for the performance measure. Vesting under the performance-based restricted stock units is dependent upon meeting specified performance goals. Target amounts represent the number of shares pursuant to the performance-based restricted stock units that would vest if the performance goals are met and assume that no shares are subsequently forfeited. If the performance goals were not met at the threshold level, no shares would be issued. If the performance goals were met at or above the maximum target level, the maximum amount of shares issuable pursuant to the performance-based restricted stock units would be issued. For more information on these awards (including the performance goals and target percentages), see the section entitled “Compensation Discussion and Analysis.”

 

3 Represents the grant date fair value for awards of restricted stock and performance-based restricted stock units granted in fiscal year 2013 to each of the Named Executive Officers computed in accordance with FASB ASC Topic 718 at the target level, excluding any estimates of future forfeitures. For a discussion of the assumptions used to calculate the value of awards of restricted stock and the performance-based restricted stock units, see Note 16 to our Consolidated Financial Statements in the Form 10-K for the year ended November 30, 2013, as filed with the SEC.

 

4 Mr. Ranadivé’s target annual incentive award is set at 100 percent of his base salary, pursuant to the terms of his Employment Agreement.

 

5 Ms. Carey resigned on April 19, 2013. As a result of this resignation, Ms. Carey forfeited all of her outstanding and unvested stock grants, including 100% of this award.

 

6 Mr. Lee resigned on January 24, 2014. As a result of this resignation, Mr. Lee forfeited all of his outstanding and unvested stock grants, including 100% of this award.

Non-Equity Incentive Plan Awards

Our EICP is designed to grant annual cash awards based on our financial results for the fiscal year. For more information about our annual cash incentive awards, see the discussion under “Compensation Discussion and Analysis.”

Equity Incentive Plan Awards

The awards made pursuant to the performance-based restricted stock units were granted under our Plan. In December 2013, the Compensation Committee determined that the performance criteria with respect to such PRSUs had not been met, such that none of the executive officers earned performance-based restricted stock units with respect to the grants in fiscal year 2013, except for Mr. Ranadivé’s performance based restricted stock units, which have a 3-year performance period and still may be earned. The performance-based restricted stock awards provided for vesting at a rate of 25 percent per year, beginning with the date the performance based restricted stock units were deemed to have been earned after satisfaction of the performance goals therein. If we declare or pay any cash dividends on our common stock, the holders of restricted stock awards will be entitled to such dividends. For more information about the terms of the performance-based restricted stock units, see the discussion under “Compensation Discussion and Analysis.”

Stock Awards

The restricted stock awards were granted under our Plan. The restricted stock awards provide for vesting over four years at a rate of 25 percent per year on the anniversary of the grant date except as otherwise noted. If we declare or pay any cash dividends on our common stock, the holders of restricted stock awards will be entitled to such dividends.

 

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Outstanding Equity Awards at Fiscal Year-End 2013

The following table sets forth information concerning stock option and restricted stock awards as of November 30, 2013 for our Named Executive Officers. The amounts under “Market Value of Shares of Stock or Units That Have Not Vested” were calculated as the product of the closing price of our common stock on the NASDAQ Global Select Market on November 29, 2013, which was $24.17, and the number of shares pursuant to the applicable restricted stock award.

 

    Option Awards     Stock Awards  

Name

  Number of
Securities
Underlying
Unexercised
Options
Exercisable
    Number of
Securities
Underlying
Unexercised
Options
Unexercisable1
    Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
  Option
Exercise
Price
    Option
Expiration
Date
    Number
of Shares
of Stock
or Units
That
Have Not
Vested2
    Market Value
of Shares of
Stock or Units
That Have
Not Vested
    Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
    Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned Shares,
Units or
Other Rights
That Have
Not Vested
 

Vivek Y. Ranadivé

    986,302          $ 7.30        5/7/2014           
    984,918          $ 6.63        5/13/2015           
    900,000          $ 8.99        7/3/2014           
    700,000          $ 7.83        5/6/2015           
    250,000        26,042        $ 6.94        4/24/2016           
    161,458        88,542        $ 29.52        4/15/2018           
              131,250      $ 3,172,313       
              25,000      $ 604,250       
              37,500      $ 906,375       
              175,000      $ 4,229,750       
                  600,000 3    $ 14,502,000   
                  75,000 4    $ 1,812,750   
                  175,000 5    $ 4,229,750   
                  175,000 6    $ 4,229,750   

Matthew Langdon

    1,500          $ 7.30        5/7/2014           
    6,250          $ 8.87        5/18/2014           
    2,812          $ 7.83        5/6/2015           
    13,812          $ 6.94        4/24/2016           
    7,791        4,272        $ 29.52        4/15/2018           
              1,500      $ 36,255       
              11,250      $ 271,913       
              22,500      $ 543,825       
              15,000      $ 362,550       
              2,694      $ 65,114       
                  55,000 3    $ 1,329,350   
                  30,009 5    $ 725,318   

Sydney Carey7………

    —          —                —            —       

Murray D. Rode

    14,583          $ 7.83        5/6/2015           
    19,792          $ 6.94        4/24/2016           
    48,438        26,562        $ 29.52        4/15/2018           
              22,500      $ 543,825       
              6,250      $ 151,063       
              40,000      $ 966,800       
              12,500      $ 302,125       
                  300,000 3    $ 7,251,000   
                  12,500 4    $ 302,125   
                  30,000 5    $ 725,100   
                  40,000 6    $ 966,800   

 

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    Option Awards     Stock Awards  

Name

  Number of
Securities
Underlying
Unexercised
Options
Exercisable
    Number of
Securities
Underlying
Unexercised
Options
Unexercisable1
    Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
  Option
Exercise
Price
    Option
Expiration
Date
    Number
of Shares
of Stock
or Units
That
Have Not
Vested2
    Market Value
of Shares of
Stock or Units
That Have
Not Vested
    Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
    Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned Shares,
Units or
Other Rights
That Have
Not Vested
 

Murat Sonmez

    53,820        29,513        $ 29.52        4/15/2018           
              22,500      $ 543,825       
              13,888      $ 335,673       
              35,000      $ 845,950       
              6,250      $ 151,063       
                  300,000 3    $ 7,251,000   
                  13,888 4    $ 335,673   
                  30,000 5    $ 725,100   
                  35,000 6    $ 845,950   

William Hughes

    10,417          $ 6.94        4/24/2016           
    33,369        18,298        $ 29.52        4/15/2018           
              4,166      $ 100,692       
              8,610      $ 208,104       
              25,000      $ 604,250       
              16,875      $ 407,869       
                  275,000 3    $ 6,646,750   
                  8,610 4    $ 208,104   
                  22,500 5    $ 543,825   
                  25,000 6    $ 604,250   

Peter Lee8

    8,115        7,260        $ 29.52        4/15/2018           
              1,875      $ 45,319       
              200,000      $ 4,834,000       
              22,500      $ 543,825       
              3,500      $ 84,595       
                  135,000 3    $ 3,262,950   
                  50,000 5    $ 1,208,500   

 

1

Shares subject to stock option awards vest as to 1/48th of the shares beginning one month after the grant date and 1/48th of the shares each month thereafter.

 

2 Shares subject to these restricted stock awards vest over a 4-year period at a rate of 25% per year.

 

3 Award of restricted stock units that were made pursuant to the LTIP awards granted in February 2010 and April 2010. Under the terms of these PRSUs, the PRSUs were eligible to start vesting as of the end of our fiscal year 2012 because the Company achieved the performance goals contained therein. Half of the PRSUs vested in December 2012 and the other half vested in December 2013. These PRSUs are subject to a mandatory deferral period before any shares of common stock are issued in settlement of the vested awards.

 

4 Award of performance-based restricted stock units that were made pursuant to the Plan and granted in January 2011. In February 2012, the Compensation Committee determined that the maximum criteria with respect to the PRSUs granted in January 2011 had been met based on our fiscal year 2011 non-GAAP EPS, such that each of the Named Executive Officers earned performance-based restricted stock units equal to 150% of the target number of such restricted stock units. This table shows the number of shares and market value of such restricted stock units at the 150% level. Shares subject to the performance-based restricted stock units vested as to 25% at the end of the performance period, with the remaining shares vesting annually over three years such that the shares will vest fully four years from the date of determination.

 

5 Award of performance-based restricted stock units that were made pursuant to the Plan and granted in February 2012 and July 2012. Target awards would be earned under these PRSUs if we were able to grow non-GAAP earnings per share at an annual average rate of 15 percent over a three-year period with the possibility of earning additional awards for achievement of non-GAAP earnings per share growth of up to 25 percent. The executive officers did not meet the performance targets in the PRSU in fiscal year 2012 or in fiscal year 2013 and did not earn any restricted stock units for the first two years. The PRSUs will vest in the first quarter of fiscal year 2015 (with respect to 50% of such units that have been earned as of that date, if any) and the first quarter of fiscal year 2016 (with respect to the remainder of units earned, if any).

 

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6 Awards of performance-based restricted stock units that were made pursuant to the Plan and granted in February 2013. Mr. Ranadivé’s award has a performance goal based on fiscal years 2013 through 2015 performance and therefore cannot be earned prior to the completion of the performance period in fiscal year 2015. The other Named Executive Officers received awards that set a performance goal based on total revenue for fiscal year 2013. We failed to meet the performance target for this award for fiscal year 2013 and, as a result, no shares were earned and the performance-based restricted stock units were canceled.

 

7 Ms. Carey resigned as Chief Financial Officer on April 19, 2013. By November 30, 2013, Ms. Carey had exercised all vested stock options and forfeited all unvested stock options and stock awards.

 

8 Mr. Lee resigned as Executive Vice President on January 24, 2014. By the date of this filing, Mr. Lee had exercised all vested stock options and forfeited all unvested stock options and stock awards.

Option Exercises and Stock Vested at Fiscal Year-End 2013

The following table sets forth information on stock option award exercises and restricted stock award and restricted stock units vesting during fiscal year 2013 by our Named Executive Officers. The value realized on exercise for stock option awards is calculated as the difference between the closing prices of our common stock on the NASDAQ Global Select Market on the exercise date and the exercise price of the applicable stock option award. The value realized on vesting for restricted stock awards and restricted stock units is calculated as the product of the number of shares subject to the restricted stock award or restricted stock units that vested and the closing price of our common stock on the NASDAQ Global Select Market on the vesting date.

 

     Option Awards     Stock Awards  

Name

   Number of
Shares
Acquired on
Exercise
    Value
Realized on
Exercise
    Number of
Shares or Units
Acquired on
Vesting
     Value
Realized on
Vesting
 

Vivek Y. Ranadivé

     1,400,000 1    $ 24,125,482 1      212,500       $ 4,920,563   

Matthew Langdon

     1,500      $ 22,979        12,964       $ 279,789   

Sydney Carey

     30,000      $ 393,657        67,015       $ 1,452,516   

Murray D. Rode

     —          —          45,625       $ 1,023,188   

Murat Sonmez

     7,292      $ 127,578        47,362       $ 1,063,781   

William Hughes

     —          —          75,557       $ 1,535,166   

Peter Lee

     22,917      $ 292,054        11,125       $ 251,738   

 

1 All 1,400,000 of the stock option awards exercised by Mr. Ranadivé had expiration dates not later than December 3, 2013 and were exercised within the one month prior to their expiration.

Severance and Change in Control Arrangements

As more fully described below, we provide severance protections to our Named Executive Officers under the Change in Control Plan and to Mr. Ranadivé, our Chief Executive Officer, under his employment agreement. Separately, the equity agreements under our equity plans contain a provision that results in an automatic change to the vesting schedule of all outstanding equity awards (including those to our Named Executive Officers) in the event of a change in control. Finally, the Plan provides for acceleration in the event employment is terminated in connection with a change in control.

Equity Plans

In the event of a change in control of TIBCO, the vesting schedules under all outstanding equity awards under our equity plans would automatically change to a three-year vesting period at a rate of 1/36th per month. As a result, the vesting schedule of our outstanding stock option awards would be altered both retroactively and prospectively such that 1/36th of the shares would vest monthly from the vesting commencement date, rather than the standard vesting schedule of 1/48th per month. For restricted stock and restricted stock units, the vesting schedule would be altered both retroactively and prospectively such that 1/36th of the restricted stock awards and

 

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restricted stock units would vest monthly from the vesting commencement date, rather than the standard vesting schedule of 1/4th per year. This will result in the partial accelerated vesting of the outstanding equity awards to all our employees, including our Named Executive Officers, upon a change in control. In addition, our Plan provides that in the event that a successor company terminates the employment of an employee without cause within 24 months of a change in control, all equity awards outstanding under that plan will be accelerated in full.

Employment Agreement with Our Chief Executive Officer

We are a party to an employment agreement with our Chief Executive Officer that was amended and restated in February 2012. The agreement sets Mr. Ranadivé’s annual target bonus at 100% of his base salary. The agreement also provides for certain severance benefits. If his employment is terminated by TIBCO without cause or by Mr. Ranadivé for good reason (other than during the period within three months prior to and twelve months following a change in control (as defined below)) he will receive (i) twelve months of base salary and paid coverage under our medical, dental and vision benefit plans; (ii) a lump sum payment equal to his actual annual incentive award received for the fiscal year immediately preceding the fiscal year in which the termination occurs; and (iii) except to such greater extent as may be provided in the applicable equity award agreement, twelve months of accelerated vesting of his time-based equity awards then held (provided that any performance-based equity awards will remain subject to the applicable performance goals unless waived by our Board of Directors). In addition, Mr. Ranadivé will have twelve months to exercise any stock options that have accelerated vesting described in the preceding sentence, but in no event beyond the original expiration of the award.

If Mr. Ranadivé’s employment is terminated without cause or by Mr. Ranadivé for good reason and the termination occurs within three months prior to and up to twelve months following a change in control, he will receive (i) 24 months of base salary and paid coverage under our medical, dental and vision benefit plans; (ii) a lump-sum payment equal to two times the average of his actual annual incentive award for the two fiscal years immediately preceding the fiscal year in which the change in control occurs; and (iii) except to such greater extent (with respect to performance awards) as may be provided in the applicable equity award agreement, 100 percent vesting of all his equity awards. In addition, Mr. Ranadivé will have 24 months to exercise any equity awards that have accelerated vesting described in the preceding sentence, but in no event beyond the original expiration of the award. If Mr. Ranadivé’s employment terminates due to his death or disability, then except as otherwise provided in the applicable equity award agreement, his then-outstanding equity awards will accelerate vesting as if he had remained employed for an additional twelve months and all applicable performance goals will be assumed to have been achieved at target level during this period.

The receipt of any severance benefits described in the prior two paragraphs is subject to (i) Mr. Ranadivé signing and not revoking a separation agreement and release of claims in a form reasonably acceptable to us; and (ii) Mr. Ranadivé not soliciting any person to modify his or her employment or consulting relationship with us and not intentionally diverting business away from us for a period of twelve months in the case of a termination not involving a change in control and for a period of 24 months in the case of a termination involving a change in control. In addition, the receipt of severance benefits in connection with a change in control is also subject to Mr. Ranadivé’s agreement not to engage in competition with us beginning from the date of termination and ending on the date on which he no longer receives the base salary payments described above. The terms of the agreement were reviewed, negotiated and approved by the Compensation Committee.

Each of our executive officers, including Mr. Ranadivé and our other Named Executive Officers, is a party to our standard employee non-disclosure and invention assignment agreement. Under the non-disclosure agreements, for one year following their termination, our employees agree not to solicit any other employee to leave our employ. These employees also agree not to disclose any confidential information that they obtained during their employment to any third parties at any time during or subsequent to their employment. In addition, any inventions, discoveries or improvements created by the employees during their employment belong to us.

 

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Retention Agreement with our Chief Financial Officer

We entered into a retention letter agreement with our Chief Financial Officer on July 8, 2013. Under the agreement, Mr. Langdon received a one-time cash retention bonus of $300,000. Pursuant to the terms of the cash retention bonus, Mr. Langdon must repay the entire bonus if, prior to July 15, 2014, he either fails to relocate to the San Francisco Peninsula area or he resigns, gives notice of resignation or is terminated for Cause. In the event that Mr. Langdon resigns, gives notice of resignation or is terminated for Cause between July 15, 2014, and July 15, 2015, he will be obligated to repay one-half of the bonus.

Change in Control and Severance Plan

We have adopted a Change in Control and Severance Plan that applies to our executive officers, including our Named Executive Officers. The Change in Control and Severance Plan is designed to ensure that the members of the team negotiating a change in control transaction do not leave during such negotiation and that members of the management team remain with the Company to complete any such transaction and to assist with the integration as required. Pursuant to the terms of the Change in Control and Severance Plan, if on the date of the change in control or within twelve months after the completion of a change in control, a Named Executive Officer (other than Mr. Ranadivé) terminates his or her employment for good reason or is terminated by us for reasons other than cause, death or permanent disability, that person will receive (i) a lump sum payment equal to twelve months of base salary and his target annual incentive award; (ii) twelve months of paid medical and dental coverage; and (iii) 50 percent accelerated vesting of his or her outstanding and unvested equity awards with the applicable performance goals (if any) deemed achieved at target levels.

If a Named Executive Officer (including Mr. Ranadivé) terminates his or her employment for good reason or is terminated for reasons other than cause, death or permanent disability following twelve months after the completion of a change in control, that person will receive (i) a lump sum payment equal to twelve months of base salary and his or her target annual incentive award; and (ii) twelve months of paid medical and dental coverage; provided, that with respect to Mr. Ranadivé, he will receive these benefits only to the extent that they exceed the severance benefits he would be entitled to receive under his Employment Agreement.

The receipt of any severance benefits described in the prior two paragraphs is subject to the Named Executive Officer signing an agreement releasing all claims relating to such employee’s employment with us and agreeing not to disparage us, our directors or our executive officers.

Important Terms

“Severance Agreements” collectively refers to the Employment Agreement with Mr. Ranadivé and the Change in Control and Severance Plan.

A “change in control” for purposes of the Severance Agreements generally consists of any of the following: (i) a sale of all or substantially all of our assets, (ii) any merger, consolidation, or other business combination transaction of TIBCO with or into another corporation, entity, or person, other than a transaction where the holders immediately prior to the transaction continue to hold at least a majority of the voting power or stock of TIBCO, (iii) the direct or indirect acquisition by any person, or persons acting as a group, of beneficial ownership or a right to acquire beneficial ownership of shares representing a majority of the voting power of the then outstanding shares of TIBCO, (iv) a contested election of directors, as a result of which or in connection with which the persons who were directors before such election or their nominees cease to constitute a majority of our Board and (v) a dissolution or liquidation of TIBCO.

“Cause” for purposes of the Employment Agreement with Mr. Ranadivé generally consists of any of the following: (i) an act of dishonesty or fraud in connection with the performance of his responsibilities to us with the intention that such act result in his substantial personal enrichment, (ii) conviction of, or plea of nolo

 

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contendere to, a felony, (iii) willful failure to perform his duties or responsibilities or (iv) a violation or breach of any fiduciary or contractual duty to us which results in material damage to us or our business.

“Cause” for purposes of the Change in Control and Severance Plan and Mr. Langdon’s retention letter agreement generally consist of any of the following: (i) fraud or personal dishonesty in connection with employment at TIBCO that is intended to result in substantial gain or personal enrichment at our expense; (ii) conviction of, or a plea of nolo contendere to, a felony; (iii) any act of gross misconduct or failure to perform a material component of his or her responsibilities in connection with employment at TIBCO that is materially injurious to us and (iv) continued substantial violations of his or her employment duties after he or she has received written demand for performance from TIBCO.

“Good reason” for purposes of the Employment Agreement with Mr. Ranadivé generally consists of any of the following without Mr. Ranadivé’s written consent: (i) a material reduction in position or duties other than removal from the position of Chairman if the Board of Directors decides to separate the roles of our Chief Executive Officer and Chairman, (ii) a material reduction in base salary or target annual incentive award unless a reduction also applies to substantially all other executive officers and which reduces the base salary and/or target annual incentive by a percentage reduction that is no greater than 10%, (iii) a material and significant reduction in the aggregate compensation paid to him pursuant to our employee benefits package unless a reduction also applies to substantially all other executive officers and reduces the level of the aggregate value of the employee benefits by a percentage reduction that is no greater than 10% or (iv) relocation of his primary place of business for the performance of his duties by more than thirty (30) miles.

“Good reason” for purposes of the Change in Control and Severance Plan generally consists of any of the following without the Named Executive Officer’s written consent: (i) a material reduction in the person’s authority, status or responsibilities if such reduction is imposed without cause, (ii) a reduction in base salary unless the base salary of substantially all other employees is reduced, (iii) a reduction in certain benefits unless the benefits of substantially all other employees also is reduced and (v) the relocation of the executive’s principal place of business to a location which is more than thirty (30) miles away.

 

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Estimate of Severance and Change in Control Benefits

The following table estimates potential payments upon termination as if our Named Executive Officers serving at the end of fiscal year 2013 had terminated on November 30, 2013, in connection with a change in control or other termination covered by the Severance Agreements and the Plan and potential payments relating to the changed vesting schedule of outstanding equity awards under our Plan in connection with a change in control. The table reflects termination scenarios covered by the Severance Agreements and the benefits receivable thereunder, as well as under our equity plans. The closing market price per share of our common stock on November 29, 2013 was $24.17. No payments other than those required by law or pursuant to general company policies and procedures would occur in the event of a Named Executive Officer’s voluntary resignation (other than for good reason, as such term is defined in the applicable Severance Agreement), termination for cause, death or disability.

 

     Termination Without
Cause or Resignation
for Good Reason
without Change in
Control
     Termination Without
Cause or Resignation
for Good Reason
within 12 Months of
a Change in

Control1, 2
     Termination Without
Cause or Resignation
for Good Reason
12 Months after a
Change in Control2
     Change in
Control
Without
Termination
 

Base Salary

           

Vivek Y. Ranadivé

   $ 595,100       $ 1,190,200       $ 595,100         —     

Murray D. Rode

     —         $ 500,000       $ 500,000         —     

Matt Langdon

     —         $ 350,000       $ 350,000         —     

Murat Sonmez

     —         $ 410,000       $ 410,000         —     

William Hughes

     —         $ 380,000       $ 380,000         —     

Peter Lee

     —         $ 400,000       $ 400,000         —     

Annual Cash Incentives

           

Vivek Y. Ranadivé

   $ 306,000       $ 1,127,833       $ 306,000         —     

Murray D. Rode

     —         $ 400,000       $ 400,000         —     

Matt Langdon

     —         $ 245,000       $ 245,000         —     

Murat Sonmez

     —         $ 328,000       $ 328,000         —     

William Hughes

     —         $ 304,000       $ 304,000         —     

Peter Lee

     —         $ 320,000       $ 320,000         —     

Health Coverage

           

Vivek Y. Ranadivé

   $ 17,064       $ 34,128       $ 17,064         —     

Murray D. Rode

     —         $ 28,893       $ 28,893         —     

Matt Langdon

     —         $ 21,683       $ 21,683         —     

Murat Sonmez

     —         $ 28,893       $ 28,893         —     

William Hughes

     —         $ 28,893       $ 28,893         —     

Peter Lee

     —         $ 21,683       $ 21,683         —     

Acceleration of Equity Awards

           

Vivek Y. Ranadivé

   $ 11,933,938       $ 18,882,813       $ 18,882,813       $ 4,364,028   

Murray D. Rode

     —         $ 5,966,969       $ 5,966,969       $ 978,549   

Matt Langdon

     —         $ 1,944,331       $ 1,944,331       $ 284,698   

Murat Sonmez

     —         $ 5,921,632       $ 5,921,632       $ 986,535   

William Hughes

     —         $ 4,859,155       $ 4,859,155       $ 624,709   

Peter Lee

     —         $ 7,139,214       $ 7,139,214       $ 1,053,073   

Total

           

Vivek Y. Ranadivé

   $ 12,852,101       $ 21,234,973       $ 19,800,976       $ 4,364,028   

Murray D. Rode

     —         $ 6,895,861       $ 6,895,861       $ 978,549   

Matt Langdon

     —         $ 2,561,015       $ 2,561,015       $ 284,698   

Murat Sonmez

     —         $ 6,688,524       $ 6,688,524       $ 986,535   

William Hughes

     —         $ 5,572,047       $ 5,572,047       $ 624,709   

Peter Lee

     —         $ 7,880,897       $ 7,880,897       $ 1,053,073   

 

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1 For Mr. Ranadivé, the severance benefits listed apply to a termination without cause or a resignation for good reason that occurs within three months prior to or up to twelve months following a change in control. For all other Named Executive Officers, the severance benefits listed apply to a termination without cause or a resignation for good reason that occurs on or after the date of the change in control.
2 The amounts under acceleration of equity awards take into account the Severance Agreements, as well as the acceleration pursuant to our equity plans.

Equity Compensation Plan Information

The following table sets forth information about our common stock that may be issued upon the exercise of options, warrants and rights under all of our existing equity compensation plans as of November 30, 2013.

 

Plan Category

   Number of
Securities to
be Issued Upon
Exercise of
Outstanding
Options,
Warrants,

and Rights (a)
    Weighted-
Average
Exercise Price
of Outstanding
Options,
Warrants

and Rights1 (b)
     Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in

Column (a)) (c)
 

Equity compensation plans approved by security holders

     12,111,161 2    $ 11.60         12,070,295 3 

Equity compensation plans not approved by security holders4

     60,225      $ 11.43         544,863   
  

 

 

   

 

 

    

 

 

 

Total

     12,171,386      $ 11.60         12,615,158   
  

 

 

   

 

 

    

 

 

 

 

1 The weighted-average exercise price does not take into account the shares issuable upon vesting of outstanding stock awards, which have no exercise price.

 

2 Includes (i) 7.6 million shares issuable upon exercise of outstanding stock options under the Plan or the 1996 Plan (which is no longer active), (ii) 2.8 million shares issuable pursuant to performance based restricted stock units under the Plan (assuming target performance, except where the actual amount is determinable), (iii) 1.0 million shares issuable upon vesting of outstanding restricted stock units under the Plan and (iv) 0.7 million shares issuable upon exercise of outstanding stock options under the 1998 Director Option Plan. Excludes (i) 2.0 million shares issuable with respect to performance based restricted stock units that have vested, but the receipt of which is being deferred, and (ii) 0.3 million shares issuable with respect to restricted stock units that have vested, but the receipt of which is being deferred.

 

3 This number includes 8.3 million shares available for future issuance under the 2008 Employee Stock Purchase Plan and 1.0 million shares available for future issuance under the 2009 Deferred Compensation Plan.

 

4 Represents options and awards under the Inducement Award Plan or assumed in connection with our acquisitions.

 

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RELATED PARTY TRANSACTIONS

Related Party Transactions Policy and Procedure

Our Board of Directors has adopted a Related Party Transaction Policy and Procedure regarding the review and approval of transactions between TIBCO and any entity in which a related person has, had or may have a direct or indirect material interest. For purposes of this policy, a related person is: (i) an executive officer, director or director nominee of TIBCO, (ii) a beneficial owner of more than five percent of our common stock, (iii) an immediate family member of an executive officer, director or director nominee or beneficial owner of more than five percent of our common stock, or (iv) any entity that is owned or controlled by any of the foregoing persons or in which any of the foregoing persons has a substantial ownership interest or control. Under our Related Party Transaction Policy and Procedure, the Board of Directors must approve or disapprove any related party transactions. Directors may not participate in the evaluation or approval of any related party transaction for which he or she is a related party.

Related Party Transaction

The following is a summary of a transaction that we entered into during fiscal year 2013 in which the amount involved exceeded $120,000 and in which our Chief Executive Officer had a direct or indirect material interest.

Software License and Services Agreement

We and the Sacramento Kings Limited Partnership, L.P. (the “Kings”) entered into an end user license agreement (the “Kings Agreement”) pursuant to which we provide the Kings with certain software licenses and software development services. Vivek Ranadivé is the majority owner of the Kings and serves as both our Chief Executive Officer and as a member of our Board of Directors. For fiscal year 2013, pursuant to the Kings Agreement, we provided software development services with a value of approximately $0.4 million, agreed to provide future maintenance and provided certain software licenses to the Kings. In consideration for these products and services, the Kings have begun to provide, and will continue to provide, us with a combination of marketing services, including signage at the Kings’ arena, hospitality, sponsorship opportunities and promotional and marketing rights. In addition, the Kings Agreement allows us to develop and introduce a pilot product that we can showcase to other potential customers.

 

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OTHER MATTERS

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires that our executive officers and directors, and persons who own more than 10 percent of a registered class of our equity securities, file reports of ownership and changes in ownership with the SEC. Executive officers, directors and greater than 10 percent stockholders are required by SEC rules to furnish us with copies of all forms they file. Based solely on our review of the copies of such forms we received and written representations from certain reporting persons, we believe that all Section 16(a) filing requirements applicable to our executive officers, directors and 10 percent stockholders were complied with during fiscal year 2013, except for one late filing on Form 4 with respect to Mr.  Hogenson.

Delivery of Documents to Stockholders Sharing an Address

We have adopted a process for delivering documents to stockholders approved by the SEC called “householding.” Under this process, stockholders of record who have the same address and last name will receive only one copy of the Annual Report and Proxy Statement unless we or one of our mailing agents has received contrary instructions from any stockholder at that address. We will continue to mail a proxy card to each stockholder of record.

If you prefer to receive multiple copies of the Annual Report and Proxy Statement at the same address, additional copies will be provided to you promptly upon written or oral request. If you are a stockholder of record, you may contact us by writing to TIBCO Software Inc., Attention: Investor Relations, 3303 Hillview Avenue, Palo Alto, California 94304 or calling our Investor Relations Department at (650) 846-1000. Eligible stockholders of record receiving multiple copies of the Annual Report and Proxy Statement can request householding by contacting us in the same manner.

If you are a beneficial owner holding shares through your broker, bank or other nominee, you may request additional copies of the Annual Report or Proxy Statement or you may request householding by notifying your broker, bank or nominee.

Stockholder Proposals to be Presented at Next Annual Meeting

Proposals of stockholders that are intended for inclusion in our proxy statement relating to the 2015 Annual Meeting must be received by us at our offices at 3303 Hillview Avenue, Palo Alto, California 94304, by November 5, 2014 and must satisfy the conditions established by the SEC, including, but not limited to, Rule 14a-8 promulgated under the Exchange Act, and in our bylaws for stockholder proposals in order to be included in our proxy statement for that meeting. Stockholder proposals that are not intended to be included in our proxy materials for such meeting but that are intended to be presented by the stockholder from the floor are subject to the advance notice procedures described below under “Transaction of Other Business.”

Transaction of Other Business

At the date of this Proxy Statement, the only business that the Board of Directors intends to present or knows that others will present at the meeting is as set forth above. If any other matter or matters are properly brought before the meeting, or any adjournment or postponement thereof, it is the intention of the persons named in the accompanying form of proxy to vote the proxy on such matters in accordance with their best judgment. Stockholders may only present a matter from the floor for consideration at a meeting if certain procedures are followed. Under our bylaws, in order for a matter to be deemed properly presented by a stockholder, timely notice must be delivered to or mailed and received by the Corporate Secretary at our principal executive offices not later than the close of business on the 90th day, nor earlier than the close of business on the 120th day, prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the

 

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event that no annual meeting was held in the previous year or the annual meeting is called for a date that is not within thirty days before or more than sixty days after such anniversary date, notice by the stockholder to be timely must be so received not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of (i) the 90th day prior to such annual meeting and (ii) the tenth day following the day on which public announcement of the date of such annual meeting is first made. Our bylaws specify the information with respect to making stockholder proposals that is required to be included in the written notice that must be provided to our Corporate Secretary. Stockholders may contact the Corporate Secretary at our principal executive offices for a copy of the relevant bylaw provisions regarding the requirements for making stockholder proposals. Additionally, a copy of our bylaws is available on our website at http://www.tibco.com under “About Us—Investor Information—Corporate Governance.”

In addition, if the stockholder wishes to nominate a person for election to the Board of Directors, the notice must also include certain information as detailed under the section entitled “Board of Directors—Director Nomination Process—Stockholder Nominations.”

The presiding officer of the meeting may refuse to acknowledge any matter not made in compliance with the foregoing procedure.

 

By Order of the Board of Directors,

LOGO

William R. Hughes

Secretary

Palo Alto, California

March 3, 2014

 

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Exhibit A

TIBCO SOFTWARE INC.

2008 EQUITY INCENTIVE PLAN

(February 27, 2014 Restatement)

 

 


Table of Contents

TABLE OF CONTENTS

 

          Page  

SECTION 1 BACKGROUND AND PURPOSE

     A-1   

1.1

   Background and Effective Date      A-1   

1.2

   Purpose of the Plan      A-1   

SECTION 2 DEFINITIONS

     A-1   

2.1

   “1934 Act”      A-1   

2.2

   “Affiliate”      A-1   

2.3

   “Award”      A-1   

2.4

   “Award Agreement”      A-1   

2.5

   “Board”      A-1   

2.6

   “Cause”      A-1   

2.7

   “Change of Control”      A-2   

2.8

   “Code”      A-2   

2.9

   “Committee”      A-2   

2.10

   “Company”      A-2   

2.11

   “Consultant”      A-2   

2.12

   “Covered Employee”      A-2   

2.13

   “Director”      A-2   

2.14

   “Disability”      A-2   

2.15

   “Employee”      A-2   

2.16

   “Exchange Program”      A-2   

2.17

   “Exercise Price”      A-2   

2.18

   “Fair Market Value”      A-2   

2.19

   “Fiscal Year”      A-3   

2.20

   “Grant Date”      A-3   

2.21

   “Incentive Stock Option”      A-3   

2.22

   “Inside Director”      A-3   

2.23

   “Non-Employee Director”      A-3   

2.24

   “Nonqualified Stock Option”      A-3   

2.25

   “Option”      A-3   

2.26

   “Other Cash-Based Award”      A-3   

2.27

   “Other Stock-Based Award”      A-3   

2.28

   “Participant”      A-3   

2.29

   “Performance Goals”      A-3   

2.30

   “Performance Period”      A-4   

2.31

   “Period of Restriction”      A-4   

2.32

   “Plan”      A-4   

2.33

   “Restricted Stock”      A-4   

2.34

   “Restricted Stock Unit” or “RSU”      A-4   

2.35

   “Retirement”      A-4   

2.36

   “Rule 16b-3”      A-4   

2.37

   “Section 16 Person”      A-4   

2.38

   “Shares”      A-4   

2.39

   “Stock Appreciation Right” or “SAR”      A-4   

2.40

   “Subsidiary”      A-4   

2.41

   “Tax Obligations”      A-5   

2.42

   “Termination of Service”      A-5   

2.43

   “TIBCO Prior Plans”      A-5   

 

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TABLE OF CONTENTS

(continued)

 

          Page  

SECTION 3 ADMINISTRATION

     A-5   

3.1

   The Committee      A-5   

3.2

   Authority of the Committee      A-5   

3.3

   Delegation by the Committee      A-5   

3.4

   Decisions Binding      A-6   

3.5

   Restrictions and Legends      A-6   

SECTION 4 SHARES SUBJECT TO THE PLAN

     A-6   

4.1

   Number of Shares      A-6   

4.2

   Full Value Awards      A-6   

4.3

   Lapsed Awards      A-6   

4.4

   Adjustments in Awards and Authorized Shares      A-6   

SECTION 5 STOCK OPTIONS

     A-7   

5.1

   Grant of Options      A-7   

5.2

   Award Agreement      A-7   

5.3

   Exercise Price      A-7   

5.4

   Expiration of Options      A-7   

5.5

   Exercisability of Options      A-8   

5.6

   Payment      A-8   

5.7

   Certain Additional Provisions for Incentive Stock Options      A-8   

SECTION 6 STOCK APPRECIATION RIGHTS

     A-8   

6.1

   Grant of SARs      A-8   

6.2

   SAR Agreement      A-9   

6.3

   Expiration of SARs      A-9   

SECTION 7 RESTRICTED STOCK

     A-9   

7.1

   Grant of Restricted Stock      A-9   

7.2

   Restricted Stock Agreement      A-9   

7.3

   Other Restrictions      A-9   

7.4

   Voting Rights      A-10   

7.5

   Dividends and Other Distributions      A-10   

SECTION 8 RESTRICTED STOCK UNITS

     A-10   

8.1

   Grant of RSUs      A-10   

8.2

   RSU Agreement      A-10   

8.3

   Section 162(m) Performance Objectives      A-10   

SECTION 9 OTHER STOCK-BASED OR CASH-BASED AWARDS

     A-11   

9.1

   Grant of Other Stock-Based or Cash-Based Awards      A-11   

9.2

   General Restrictions      A-11   

SECTION 10 GENERAL PROVISIONS

     A-11   

10.1

   Impact of Change of Control on Options, SARs, Restricted Stock Awards, Restricted Stock Unit Awards and Other Stock-Based Awards      A-11   

10.2

   Impact of Change of Control on Other Cash-Based Awards      A-12   

10.3

   Assumption of Options, SARs, Restricted Stock Awards, Restricted Stock Unit Awards, and Other Stock-Based Awards Upon Change of Control      A-12   

10.4

   Deferrals      A-12   

10.5

   No Effect on Employment or Service      A-12   

10.6

   Cancellation and Rescission of Awards      A-12   

10.7

   Participation      A-13   

10.8

   Successors      A-13   

10.9

   Beneficiary Designations      A-13   

 

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TABLE OF CONTENTS

(continued)

 

          Page  

10.10

   Limited Transferability of Awards      A-13   

10.11

   No Rights as Stockholder      A-14   

10.12

   Leaves of Absence      A-14   

10.13

   Limitations on Non-Employee Directors Awards.      A-14   

SECTION 11 AMENDMENT, TERMINATION, AND DURATION

     A-14   

11.1

   Amendment, Suspension, or Termination      A-14   

11.2

   Duration of the Plan      A-14   

SECTION 12 TAX WITHHOLDING

     A-15   

12.1

   Withholding Requirements      A-15   

12.2

   Withholding Arrangements      A-15   

SECTION 13 LEGAL CONSTRUCTION

     A-15   

13.1

   Gender and Number      A-15   

13.2

   Severability      A-15   

13.3

   Requirements of Law      A-15   

13.4

   Securities Law Compliance      A-15   

13.5

   Code Section 409A      A-15   

13.6

   Governing Law      A-15   

13.7

   Captions      A-15   

 

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TIBCO SOFTWARE INC.

2008 EQUITY INCENTIVE PLAN

(February 27, 2014 Restatement)

SECTION 1 BACKGROUND AND PURPOSE

1.1 Background and Effective Date. The Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, and Restricted Stock Units. The Plan was originally effective as of August 1, 2008, upon approval by an affirmative vote of the holders of a majority of the Shares that were present in person or by proxy and entitled to vote at the 2008 Annual Meeting of Stockholders of the Company. The Plan was subsequently amended and restated effective as of February 26, 2010, upon approval by an affirmative vote of the holders of a majority of the Shares that were present in person or by proxy and entitled to vote at the 2010 Annual Meeting of Stockholders of the Company. The Plan was later amended and restated effective as of March 7, 2012, subject to approval by an affirmative vote of the holders of a majority of the Shares present in person or by proxy and entitled to vote at the 2012 Annual Meeting of Stockholders of the Company. This amended and restated Plan is effective as of February 27, 2014 (the “Effective Date”), subject to approval by an affirmative vote of the holders of a majority of the Shares present in person or by proxy and entitled to vote at the 2014 Annual Meeting of Stockholders of the Company.

1.2 Purpose of the Plan. The Plan is intended to attract, motivate, and retain (a) employees of the Company, its Subsidiaries and its Affiliates, (b) consultants who provide services to the Company, its Subsidiaries and Affiliates and (c) Non-Employee Directors. The Plan is also designed to permit the payment of compensation that qualifies as performance-based compensation under Section 162(m) of the Code. The Plan is intended to replace the TIBCO Prior Plans.

SECTION 2

DEFINITIONS

The following words and phrases shall have the following meanings unless a different meaning is plainly required by the context:

2.1 “1934 Act” means the Securities Exchange Act of 1934, as amended. Reference to a specific section of the 1934 Act or regulation thereunder shall include such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.

2.2 “Affiliate” means any corporation or any other entity (including, but not limited to, partnerships and joint ventures) controlling, controlled by, or under common control with the Company.

2.3 “Award” means, individually or collectively, a grant of Options, SARs, Restricted Stock, RSUs, Other Stock-Based Awards or Other Cash-Based Awards pursuant to the Plan.

2.4 “Award Agreement” means the written agreement, notice, or other instrument or document setting forth the terms and conditions applicable to each Award granted pursuant to the Plan.

2.5 “Board” means the Board of Directors of the Company.

2.6 “Cause” shall have the meaning set forth in the Participant’s employment or other agreement with the Company or any Subsidiary provided that if the Participant is not a party to any such employment or other agreement or such employment or other agreement does not contain a definition of Cause, then Cause shall have the meaning set forth in the applicable Award Agreement.

 

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2.7 “Change of Control” means (i) a sale of all or substantially all of the Company’s assets, (ii) any merger consolidation, or other business combination transaction of the Company with or into another corporation, entity, or person, other than a transaction in which the holders of at least a majority of the shares of voting capital stock of the Company outstanding immediately prior to such transaction continue to hold (either by such shares remaining outstanding or by their being converted into shares of voting capital stock of the surviving entity) a majority of the total voting power represented by the shares of voting capital stock of the Company (or the surviving entity) outstanding immediately after such transaction, (iii) the direct or indirect acquisition (including by way of a tender or exchange offer) by any person, or persons acting as a group, of beneficial ownership or a right to acquire beneficial ownership of shares representing a majority of the voting power of the then outstanding shares of capital stock of the Company, (iv) a contested election of Directors, as a result of which or in connection with which the persons who were Directors before such election or their nominees cease to constitute a majority of the Board, or (v) a dissolution or liquidation of the Company.

2.8 “Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto. Reference to a specific section of the Code or regulation thereunder shall include such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any successor legislation or regulation amending, supplementing or superseding such section or regulation.

2.9 “Committee” means the Compensation Committee of the Board or a subcommittee thereof or such other committee as may be designated by the Board to administer the Plan.

2.10 “Company” means TIBCO Software Inc., a Delaware corporation, or any successor thereto.

2.11 “Consultant” means any consultant, independent contractor, advisor, or other natural person who provides services to the Company, its Subsidiaries or Affiliates, but who is neither an Employee nor a Director; provided, further, that a Consultant will include only those persons to whom the issuance of Shares may be registered under Form S-8 under the Securities Act of 1933, as amended.

2.12 “Covered Employee” has the meaning set forth in Section 162(m)(3) of the Code.

2.13 “Director” means any individual who is a member of the Board of Directors of the Company.

2.14 “Disability” means a permanent disability in accordance with a policy or policies established by the Company from time to time.

2.15 “Employee” means any employee of the Company or of a Subsidiary, whether such employee is so employed at the time the Plan is adopted or becomes so employed subsequent to the adoption of the Plan.

2.16 “Exchange Program” means a program established by the Committee under which outstanding Awards are amended to provide for a lower Exercise Price or surrendered or cancelled in exchange for (a) Awards with a lower Exercise Price, (b) a different type of Award, (c) cash, or (d) a combination of (a), (b) and/or (c). Notwithstanding the preceding, the term Exchange Program does not include any (i) action described in Section 4.4, or (ii) transfer or other disposition permitted under Section 10.10.

2.17 “Exercise Price” means the price at which a Share may be purchased by a Participant pursuant to the exercise of an Option.

2.18 “Fair Market Value” means the closing per share selling price for Shares for the date of grant on the principal securities exchange on which the Shares are traded or, if there is no such sale on the relevant date, then on the last previous day on which a sale was reported; if the Shares are not listed for trading on a national securities exchange, the fair market value of Shares shall be determined in good faith by the Committee. Notwithstanding the preceding, for federal, state, and local income tax reporting purposes, fair market value shall

 

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be determined by the Company in accordance with uniform and nondiscriminatory standards adopted by it from time to time.

2.19 “Fiscal Year” means the fiscal year of the Company.

2.20 “Grant Date” means, with respect to an Award, the date that the Award was granted. The Grant Date of an Award shall not be earlier than the date the Award is approved by the Committee.

2.21 “Incentive Stock Option” means an Option to purchase Shares that is designated as an Incentive Stock Option and is intended to meet the requirements of Section 422 of the Code.

2.22 “Inside Director” means a Director who is an Employee.

2.23 “Non-Employee Director” means a Director who is not an employee of the Company, any Subsidiary or any Affiliate.

2.24 “Nonqualified Stock Option” means an option to purchase Shares that is not intended to be an Incentive Stock Option.

2.25 “Option” means an Incentive Stock Option or a Nonqualified Stock Option.

2.26 “Other Cash-Based Award” means a cash-based Award granted to a Participant under Section 9.1 hereof, including cash awarded as a bonus or upon the attainment of Performance Goals or otherwise as permitted under the Plan.

2.27 “Other Stock-Based Award” means an Award granted to a Participant pursuant to Section 9.1 hereof, that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares, each of which may be subject to the attainment of Performance Goals or a period of continued employment or other terms and conditions as permitted under the Plan.

2.28 “Participant” means an Employee, Non-Employee Director, or Consultant who has an outstanding Award.

2.29 “Performance Goals” means performance goals based on one or more of the following criteria: (i) earnings including operating income, earnings before or after taxes, earnings before or after interest, depreciation, amortization, or extraordinary or special items or book value per share (which may exclude nonrecurring items); (ii) pre-tax income or after-tax income; (iii) earnings per common share (basic or diluted); (iv) operating profit; (v) revenue, revenue growth or rate of revenue growth; (vi) return on assets(gross or net), return on investment, return on capital, or return on equity; (vii) returns on sales or revenues; (viii) operating expenses;(ix) stock price appreciation; (x) cash flow, free cash flow, cash flow return on investment (discounted or otherwise), net cash provided by operations, or cash flow in excess of cost of capital; (xi) implementation or completion of critical projects or processes;(xii) economic value created; (xiii) cumulative earnings per share growth; (xiv) operating margin or profit margin; (xv) common stock price or total stockholder return; (xvi) cost targets, reductions and savings, productivity and efficiencies; (xvii) intellectual property (e.g., patents); (xviii) product development; (xix) strategic business criteria, consisting of one or more objectives based on meeting specified market penetration, geographic business expansion, customer satisfaction, employee satisfaction, human resources management, supervision of litigation, information technology, and goals relating to acquisitions, divestitures, joint ventures and similar transactions, and budget comparisons; (xx) personal professional objectives, including any of the foregoing performance goals, the implementation of policies and plans, the negotiation of transactions, the development of long term business goals, formation of joint ventures, research or development collaborations, and the completion of other corporate transactions; and (xxi) any combination of, or a specified increase in, any of the foregoing. Where applicable, the Performance Goals may be expressed in terms of attaining a specified level of the particular criteria or the attainment of a percentage

 

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increase or decrease in the particular criteria, and may be applied to one or more of the Company, a Subsidiary or a division or strategic business unit of the Company, or may be applied to the performance of the Company relative to a market index, a group of other companies or a combination thereof, all as determined by the Committee. The Performance Goals may include a threshold level of performance below which no payment will be made (or no vesting will occur), levels of performance at which specified payments will be made (or specified vesting will occur), and a maximum level of performance above which no additional payment will be made (or at which full vesting will occur). Each of the foregoing Performance Goals may be determined either in accordance with generally accepted accounting principles (“GAAP”) or on a non-GAAP basis and shall be subject to certification by the Committee; provided that, to the extent an Award is intended to satisfy the performance-based compensation exception to the limits of Section 162(m) of the Code and then to the extent consistent with such exception, the Committee shall have the authority to make equitable adjustments to the Performance Goals in recognition of unusual or non-recurring events affecting the Company or any Subsidiary or the financial statements of the Company or any Subsidiary, in response to changes in applicable laws or regulations, or to account for items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business or related to a change in accounting principles. Awards issued to persons who are not Covered Employees may take into account any other factors deemed appropriate by the Committee.

2.30 “Performance Period” means the period selected by the Committee during which the performance of the Company or any Subsidiary, division or strategic business unit thereof or any individual is measured for the purpose of determining the extent to which an Award subject to Performance Goals has been earned.

2.31 “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. As provided in Section 7, such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the Committee.

2.32 “Plan” means the TIBCO Software Inc. 2008 Equity Incentive Plan, as set forth in this instrument and as hereafter amended from time to time.

2.33 “Restricted Stock” means an Award granted to a Participant pursuant to Section 7.

2.34 “Restricted Stock Unit” or “RSU” means an Award granted to a Participant pursuant to Section 8.

2.35 “Retirement” means, in the case of a Non-Employee Director or an Employee a Termination of Service occurring in accordance with a policy or policies established by the Company from time to time, provided, however that with respect to a Consultant, no Termination of Service shall be deemed to be on account of “Retirement.”

2.36 “Rule 16b-3” means Rule 16b-3 promulgated under the 1934 Act, and any future regulation amending, supplementing or superseding such regulation.

2.37 “Section 16 Person” means a person who, with respect to the Shares, is subject to Section 16 of the 1934 Act.

2.38 “Shares” means the shares of common stock of the Company.

2.39 “Stock Appreciation Right” or “SAR” means an Award, granted alone or in connection with a related Option, that pursuant to Section 6 is designated as an SAR.

2.40 “Subsidiary” means any corporation in an unbroken chain of corporations beginning with the Company as the corporation at the top of the chain, but only if each of the corporations below the Company (other than the

 

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last corporation in the unbroken chain) then owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

2.41 “Tax Obligations” means income tax and social insurance contribution, payroll tax, payment on account, or other tax-related withholding obligations and requirements in connection with the Awards, including, without limitation, (a) all federal, national, state, foreign and local taxes (including the Participant’s FICA obligation) that are required to be withheld by the Company or the employing Affiliate or Subsidiary, (b) the Participant’s and, to the extent required by the Company (or the employing Affiliate or Subsidiary), the Company’s (or the employing Affiliate or Subsidiary’s) fringe benefit tax liability, if any, associated with the grant, vesting, exercise or sale of Shares, and (c) any other Company (or employing Affiliate or Subsidiary) taxes the responsibility for which the Participant has agreed to bear with respect to such Award (including the exercise thereof or issuance of Shares thereunder).

2.42 “Termination of Service” means (a) in the case of an Employee, a cessation of the employee-employer relationship between the Employee and the Company or a Subsidiary or Affiliate for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Disability, Retirement, or the disaffiliation of a Subsidiary, but excluding any such termination where there is a simultaneous reemployment by the Company or a Subsidiary or Affiliate; (b) in the case of a Consultant, a cessation of the service relationship between the Consultant and the Company or a Subsidiary or Affiliate for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Disability, or the disaffiliation of a Subsidiary or Affiliate, but excluding any such termination where there is a simultaneous re-engagement of the consultant by the Company or a Subsidiary or Affiliate; and (c) in the case of a Non-Employee Director, a cessation of the Director’s service on the Board for any reason, including, but not by way of limitation, a termination by resignation, death, Disability, Retirement or non-reelection to the Board. For the purpose of administering the Plan, Termination of Service shall be deemed to occur when an Employee is no longer actively employed by the Company or a Subsidiary or Affiliate and will not be extended by any notice of termination period or leave period if the Employee is not actively rendering services during said period.

2.43 “TIBCO Prior Plans” means the Company’s 1996 Stock Option Plan, as amended and restated, and the Company’s 1998 Director Option Plan, as amended and restated.

SECTION 3

ADMINISTRATION

3.1 The Committee. The Plan shall be administered by the Committee.

3.2 Authority of the Committee. It shall be the duty of the Committee to administer the Plan in accordance with the Plan’s provisions. The Committee shall have all powers and discretion necessary or appropriate to administer the Plan and to control its operation, including, but not limited to, the power to (a) determine which Employees, Non-Employee Directors and Consultants shall be granted Awards, (b) prescribe the terms and conditions of the Awards, (c) interpret the Plan and the Awards, (d) adopt such procedures and subplans as are necessary or appropriate to permit participation in the Plan by Employees, Non-Employee Directors and Consultants who are foreign nationals or employed outside of the United States, (e) adopt rules and guidelines for the administration, interpretation and application of the Plan as are consistent therewith, and (f) interpret, amend or revoke any such rules and guidelines. Notwithstanding the preceding, the Committee shall not implement an Exchange Program without the approval of the holders of a majority of the Shares that are present in person or by proxy and entitled to vote at any Annual or Special Meeting of Stockholders of the Company.

3.3 Delegation by the Committee. The Committee, on such terms and conditions as it may provide, may delegate all or any part of its authority and powers under the Plan to one or more Directors or officers of the Company. Notwithstanding the foregoing, with respect to Awards that are intended to qualify as performance-

 

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based compensation under Section 162(m) of the Code, the Committee may not delegate its authority and powers with respect to such Awards if such delegation would cause the Awards to fail to so qualify. The Committee may delegate its authority and power under the Plan to one or more officers of the Company, subject to guidelines prescribed by the Committee, but only with respect to Participants who are not Section 16 Persons.

3.4 Decisions Binding. All determinations and decisions made by the Committee, the Board, and any delegate of the Committee pursuant to the provisions of the Plan shall be final, conclusive, and binding on all persons, and shall be given the maximum deference permitted by law.

3.5 Restrictions and Legends. The Committee may impose such restrictions on any Shares delivered pursuant to the Plan as it may deem advisable, including, but not limited to, restrictions on transfer or restrictions related to applicable federal securities laws, the requirements of any national securities exchange or system upon which Shares are then listed or traded, or any blue sky or state securities laws.

SECTION 4 SHARES SUBJECT TO THE PLAN

4.1 Number of Shares. Subject to adjustment as provided in Section 4.4, the total number of Shares available for issuance under the Plan shall not exceed 42,000,000. Awards granted under the TIBCO Prior Plans during the period commencing on April 17, 2008 and ending on July 31, 2008, shall be deducted from the total number of Shares available for issuance under the Plan.

4.2 Full Value Awards. Any Shares subject to Awards of Restricted Stock, Restricted Stock Units, and Other Stock-Based Awards granted on or after the Effective Date shall be counted against the numerical limits of Section 4.1 as 2.00 Shares for every one Share subject thereto. Further, if Shares acquired pursuant to any Awards of Restricted Stock, Restricted Stock Units, and Other Stock-Based Awards (whether granted before, on or after the Effective Date) are forfeited or repurchased by the Company and would otherwise return to the Plan pursuant to Section 4.3, 2.00 times the number of Shares so forfeited or repurchased shall return to the Plan and shall again become available for issuance.

4.3 Lapsed Awards. If an Award or an award under either of the TIBCO Prior Plans is settled in

cash, or is cancelled, terminates, expires, or lapses for any reason, any Shares subject to such Award again shall be available to be the subject of an Award or award under the Plan. Shares withheld in satisfaction of Tax Obligations pursuant to Section 12.2 as well as the Shares that represent payment of the Exercise Price shall cease to be available under the Plan. Shares that have actually been issued under the Plan under any Award shall not be returned to the Plan and shall not become available for future distribution under the Plan; provided, however, that if unvested Shares of Restricted Stock or Restricted Stock Units or Other Stock-Based Awards are repurchased by the Company or are forfeited to the Company, such Shares shall become available for future grant under the Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment shall not result in a reduction of the number of Shares available for issuance under the Plan. Notwithstanding the foregoing and, subject to adjustment provided in Section 4.4, the maximum number of Shares that may be issued upon the exercise of Incentive Stock Options shall equal the aggregate Share number stated in Section 4.1, plus, to the extent allowable under Section 422 of the Code, any Shares that become available for issuance under the Plan under this Section 4.3.

4.4 Adjustments in Awards and Authorized Shares. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the

 

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Committee shall, in such manner as it may deem equitable, adjust the number and class of Shares that may be delivered under the Plan, the number, class, and price of Shares (or other property or cash) subject to outstanding Awards, and the numerical limits of Sections 5.1, 6.1, 7.1, 8.1 and 9.2. Notwithstanding the preceding, the number of Shares subject to any Award always shall be a whole number.

SECTION 5

STOCK OPTIONS

5.1 Grant of Options. An Option represents the right to purchase a Share at an Exercise Price. Subject to the terms and provisions of the Plan, Options may be granted to Employees, Non-Employee Directors and Consultants at any time and from time to time as determined by the Committee. The Committee shall determine the number of Shares subject to each Award, provided that during any Fiscal Year, no Participant shall be granted Options (and/or SARs) covering more than a total of 2,000,000 Shares. Notwithstanding the foregoing, during the Fiscal Year in which a Participant first becomes an Employee, he or she may be granted Options (and/or SARs) to purchase up to a total of an additional 2,000,000 Shares. The Committee may grant Incentive Stock Options, Nonqualified Stock Options, or a combination thereof.

5.2 Award Agreement . All Options shall be evidenced by an Award Agreement that shall specify the Exercise Price, the date on which the Options will become exercisable, the expiration date of the Options, the number of Shares, any conditions to exercise the Options, and such other terms and conditions as the Committee shall determine. The Award Agreement shall also specify whether the Options are intended to be Incentive Stock Options or a Nonqualified Stock Options.

5.3 Exercise Price.

5.3.1 Nonqualified Stock Options. In the case of a Nonqualified Stock Option, the Exercise Price shall be determined by the Committee, but shall be not less than one hundred percent (100%) of the Fair Market Value on the Grant Date.

5.3.2 Incentive Stock Options. In the case of an Incentive Stock Option, the Exercise Price shall be not less than one hundred percent (100%) of the Fair Market Value on the Grant Date; provided, however, that if on the Grant Date, the Employee (together with persons whose stock ownership is attributed to the Employee pursuant to Section 424(d) of the Code) owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its Subsidiaries, the Exercise Price shall be not less than one hundred and ten percent (110%) of the Fair Market Value on the Grant Date.

5.3.3 Substitute Options. Notwithstanding the provisions of Section 5.3.2, in the event that the Company or a Subsidiary consummates a transaction described in Section 424(a) of the Code (e.g., the acquisition of property or stock from an unrelated corporation), persons who become Employees or Consultants on account of such transaction may be granted Options in substitution for options granted by their former employer (or parent company or affiliated company of such former employer). If such substitute Options are granted, the Committee consistent with Section 424(a) of the Code, may determine that each such substitute Options shall have an Exercise Price less than one hundred percent (100%) of the Fair Market Value on the Grant Date.

5.4 Expiration of Options.

5.4.1 Expiration Dates. Each Option shall terminate no later than the first to occur of the following events:

(a) The date for termination of the Option set forth in the written Award Agreement; or

(b) The expiration of seven (7) years from the Grant Date.

 

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5.4.2 Death of Participant. Notwithstanding Section 5.4.1, if a Participant dies prior to the expiration of his or her Options, the Committee may provide that his or her Options shall be exercisable for up to twelve (12) months after the date of death.

5.4.3 Committee Discretion. Subject to the seven and eight-year limits of Sections 5.4.1 and 5.4.2, the Committee (a) shall provide in each Award Agreement when each Option expires and becomes unexercisable, and (b) may, after an Option is granted, extend the maximum term of the Option (subject to Section 5.7.4 regarding Incentive Stock Options).

5.5 Exercisability of Options. Options granted under the Plan shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall determine. After an Option is granted, the Committee may accelerate the exercisability of the Option.

5.6 Payment. Options shall be exercised by the Participant giving notice and following such procedures as the Company (or its designee) may specify from time to time. Exercise of an Option also requires that the Participant make arrangements satisfactory to the Company for full payment of the Exercise Price for the Shares. All exercise notices shall be given in the form and manner specified by the Company from time to time.

The Exercise Price shall be payable to the Company in full (a) in cash or its equivalent, or (b) subject to the terms of the applicable Award Agreement, by tendering previously acquired Shares having an aggregate Fair Market Value at the time of exercise equal to the total Exercise Price, or (c) by any other means which the Committee determines to both provide legal consideration for the Shares and set forth in the applicable Award Agreement, and to be consistent with the purposes of the Plan.

5.7 Certain Additional Provisions for Incentive Stock Options.

5.7.1 Exercisability. The aggregate Fair Market Value (determined on the Grant Date(s)) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by any Employee during any calendar year (under all plans of the Company and its Subsidiaries) shall not exceed $100,000.

5.7.2 Termination of Service. No Incentive Stock Option may be exercised more than three (3) months after the Participant’s Termination of Service for any reason other than Disability or death, unless (a) the Participant dies during such three-month period, and/or (b) the Award Agreement or the Committee permits later exercise (in which case the Option instead may be deemed to be a Nonqualified Stock Option). No Incentive Stock Option may be exercised more than one (1) year after the Participant’s Termination of Service on account of Disability, unless (a) the Participant dies during such one-year period, and/or (b) the Award Agreement or the Committee permit later exercise (in which case the option instead may be deemed to be a Nonqualified Stock Option).

5.7.3 Employees Only. Incentive Stock Options may be granted only to persons who are employees of the Company or a Subsidiary on the Grant Date.

5.7.4 Expiration. No Incentive Stock Option may be exercised after the expiration of seven (7) years from the Grant Date; provided, however, that if the Option is granted to an Employee who, together with persons whose stock ownership is attributed to the Employee pursuant to Section 424(d) of the Code, owns stock possessing more than 10% of the total combined voting power of all classes of the stock of the Company or any of its Subsidiaries, the Option may not be exercised after the expiration of five (5) years from the Grant Date.

SECTION 6

STOCK APPRECIATION RIGHTS

6.1 Grant of SARs. A SAR represents the right with respect to a Share to receive a payment, in cash, Shares, or both (as determined by the Committee), with a value equal to the excess of Fair Market Value on the date of

 

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exercise (or, if so specified in the Award Agreement, on the date immediately preceding the date of exercise) over the Award’s Grant Price. Subject to the terms and conditions of the Plan, a SAR may be granted to Employees, Non-Employee Directors and Consultants at any time and from time to time as shall be determined by the Committee.

6.1.1 Number of Shares. The Committee shall determine the number of SARs, if any, granted to any Participant, provided that during any Fiscal Year, no Participant shall be granted SARs (and/or Options) covering more than a total of 2,000,000 Shares. Notwithstanding the foregoing, during the Fiscal Year in which a Participant first becomes an Employee, he or she may be granted SARs (and/or Options) covering up to a total of an additional 2,000,000 Shares.

6.1.2 Exercise Price and Other Terms. The Committee, subject to the provisions of the Plan, shall determine the terms and conditions of SARs granted under the Plan. The Exercise Price of each SAR shall be determined by the Committee but shall not be less than one hundred percent (100%) of the Fair Market Value on the Grant Date. After a SAR is granted, the Committee may accelerate the exercisability of the SAR.

6.2 SAR Agreement. Each SAR grant shall be evidenced by an Award Agreement that shall specify the exercise price, the term of the SAR, the conditions of exercise, and such other terms and conditions as the Committee shall determine.

6.3 Expiration of SARs. A SAR granted under the Plan shall expire upon the date determined by the Committee and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section 5.4 also shall apply to SARs.

SECTION 7

RESTRICTED STOCK

7.1 Grant of Restricted Stock. Restricted Stock are Shares that are awarded to a Participant and that during the Restricted Period are forfeitable to the Company upon such conditions as set forth in the applicable Award Agreement. Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock to Employees, Non-Employee Directors and Consultants as the Committee shall determine. The Committee shall determine the number of Shares, if any, to be granted to each Participant, provided that during any Fiscal Year, no Participant shall receive more than a total of 700,000 Shares of Restricted Stock (and/or Restricted Stock Units). Notwithstanding the foregoing, during the Fiscal Year in which a Participant first becomes an Employee, he or she may be granted up to a total of an additional 700,000 Shares of Restricted Stock (and/or Restricted Stock Units).

7.2 Restricted Stock Agreement. Each Award of Restricted Stock shall be evidenced by an Award Agreement that shall specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Committee shall determine. After an Award of Restricted Stock has been made, the Committee may waive all or any part of the applicable Period of Restriction.

7.3 Other Restrictions. The Committee may impose such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate, in accordance with this Section 7.3.

7.3.1 General Restrictions. The Committee may set restrictions based upon continued employment or service with the Company and its Subsidiaries, the achievement of specific performance objectives (Company-wide, departmental, or individual), applicable federal or state securities laws, or any other basis determined by the Committee.

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restrictions based upon the achievement of Performance Goals. The Performance Goals shall be set by the Committee on or before the latest date permissible to enable the Restricted Stock to qualify as “performance-based compensation” under Section 162(m) of the Code. In granting Restricted Stock which is intended to qualify under Section 162(m) of the Code, the Committee shall follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Restricted Stock under Section 162(m) of the Code (e.g., in determining the Performance Goals).

7.4 Voting Rights. During the Period of Restriction, Participants holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Committee determines otherwise.

7.5 Dividends and Other Distributions. During the Period of Restriction, Participants holding Shares of Restricted Stock shall be entitled to receive all dividends and other distributions paid with respect to such Shares unless otherwise provided in the Award Agreement. Any such dividends or distribution shall be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid, unless otherwise provided in the Award Agreement. The Company may require such dividends or other distributions be deposited with the Company until such time as the restrictions on transferability of the corresponding Shares of Restricted Stock lapse.

SECTION 8

RESTRICTED STOCK UNITS

8.1 Grant of RSUs. Restricted Stock Units represent the right to receive Shares, cash, or both (as determined by the Committee) upon satisfaction of such conditions as set forth in the applicable Award agreement. Restricted Stock Units may be granted to Employees, Non-Employee Directors and Consultants at any time and from time to time, as shall be determined by the Committee. The Committee shall determine the number of Restricted Stock Units, if any, granted to each Participant, provided that during any Fiscal Year, no Participant shall be granted more than a total of 700,000 Restricted Stock Units (and/or Shares of Restricted Stock). Notwithstanding the foregoing, during the Fiscal Year in which a Participant first becomes an Employee, he or she may be granted up to a total of an additional 700,000 Restricted Stock Units (and/or Shares of Restricted Stock).

8.2 RSU Agreement. Each Award of Restricted Stock Units shall be evidenced by an Award Agreement that shall specify any vesting conditions and/or performance objectives, the number of Restricted Stock Units granted, and such other terms and conditions as the Committee shall determine. After an Award of Restricted Stock Units has been granted, the Committee may waive any vesting or performance conditions. Except as provided in the applicable Award agreement, a Participant shall have with respect to such Restricted Stock Units none of the rights of a holder of Shares unless and until Shares are actually delivered in satisfaction of such Restricted Stock Units.

8.3 Section 162(m) Performance Objectives. For purposes of qualifying grants of Restricted Stock Units as “performance-based compensation” under Section 162(m) of the Code, the Committee may determine that the performance objectives applicable to Restricted Stock Units shall be based on the achievement of Performance Goals. The Performance Goals shall be set by the Committee on or before the latest date permissible to enable the Restricted Stock Units to qualify as “performance-based compensation” under Section 162(m) of the Code. In granting Restricted Stock Units that are intended to qualify under Section 162(m) of the Code, the Committee shall follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Restricted Stock Units under Section 162(m) of the Code (e.g., in determining the Performance Goals).

 

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SECTION 9

OTHER STOCK-BASED OR CASH-BASED AWARDS

9.1 Grant of Other Stock-Based or Cash-Based Awards. The Committee is authorized to grant Awards to Participants in the form of Other Stock-Based Awards or Other Cash-Based Awards, as deemed by the Committee to be consistent with the purposes of the Plan. The Committee shall determine the terms and conditions of such Awards, consistent with the terms of the Plan, at the date of grant or thereafter, including the Performance Goals and Performance Periods. Shares or other securities or property delivered pursuant to an Award in the nature of a purchase right granted under this Section 9.1 shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, Shares, other Awards, or other property, as the Committee shall determine, subject to any required corporate action.

9.2 General Restrictions. With respect to a Participant, (i) the maximum value of the Other Cash-Based Awards that may be granted to any Participant during any Fiscal Year is $10,000,000, and (ii) the maximum number of Shares that any Participant may be granted during any Fiscal Year with respect to Other Stock-Based Awards is 2,000,000 Shares. No payment shall be made to a Covered Employee prior to the certification by the Committee that the Performance Goals have been attained. The Committee may establish such other rules applicable to the Other Stock- or Cash-Based Awards to the extent not inconsistent with Section 162(m) of the Code. Payments earned in respect of any Cash-Based Award may be decreased or, with respect to any grantee who is not a Covered Employee, increased by the Committee based on such factors as the Committee deems appropriate.

SECTION 10 GENERAL PROVISIONS

10.1 Impact of Change of Control on Options, SARs, Restricted Stock Awards, Restricted Stock Unit Awards and Other Stock-Based Awards. Notwithstanding any other provision of the Plan or the terms of any Award of Options, SARs, Restricted Stock, RSUs and Other Stock-Based Awards, upon a Change of Control, in the event that Awards of Options, SARs, Restricted Stock, RSUs and Other Stock-Based Awards are not assumed by the successor corporation or its parent or a subsidiary pursuant to Section 10.3 below, then (a) Options and Stock Appreciation Rights outstanding as of the date of the Change of Control shall become fully vested and exercisable, (b) Restricted Stock Awards and Restricted Stock Unit Awards shall become fully vested and free of any restrictions (including, without limitation, any performance vesting criteria), and (c) the restrictions and other conditions applicable to any Other Stock-Based Awards or any other Awards shall lapse, and such Other Stock-Based Awards or such other Awards shall become free of all restrictions, limitations or conditions and become fully vested in full or part and transferable to the full extent of the original grant, subject in each case to any terms and conditions, if any, contained in the Award Agreement evidencing such Award, including but not limited to a condition that such treatment will apply only if the Participant remains employed on the effective date of the Change of Control or has incurred an involuntary termination of employment without cause on account of the Change of Control, as determined by the Committee in its sole discretion, within a period of up to 3 months prior to the effective date of the Change of Control. Notwithstanding any other provision of the Plan, the Committee, in its discretion, may determine that, upon the occurrence of a Change of Control, each outstanding Award shall be fully vested and terminate within a specified number of days after notice to the Participant, and such Participant shall receive, with respect to each Share subject to any such

Award of Restricted Stock, RSU and Other Stock-Based Awards, an amount equal to the Fair Market Value immediately prior to the occurrence of such Change of Control, or with respect to any such Award of Options or SARs, the amount equal to the Fair Market Value immediately prior to the occurrence of such Change of Control over the exercise price per share of such Option and/or SAR; such amount in either case to be payable in cash, in one or more kinds of stock or property (including the stock or property, if any, payable in the transaction) or in a combination thereof, as the Committee, in its discretion, shall determine.

 

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10.2 Impact of Change of Control on Other Cash-Based Awards. Notwithstanding any other provision of the Plan, the terms of any Other Cash-Based Award may provide in the Award Agreement evidencing the Award that, upon a Change of Control, in the event that the Other Cash-Based Awards are not assumed by the successor corporation or its parent or a subsidiary, (a) a pro rata portion of the Other Cash-Based Awards shall be considered to be earned and payable based on the portion of the Other Cash-Based Award Performance Period completed as of the date of the Change of Control and based on performance to such date, or if performance to such date is not determinable, based on target performance.

10.3 Assumption of Options, SARs, Restricted Stock Awards, Restricted Stock Unit Awards, and Other Stock-Based Awards Upon Change of Control. In the event of a Change of Control, the successor company may assume or substitute for an Option, SAR, Restricted Stock Award, Restricted Stock Unit Award, or Other Stock-Based Award. For the purposes of this Section 10.3, an Award of Option, SARs, Restricted Stock, RSUs, or Other Stock-Based Award shall be considered assumed or substituted for if following the Change of Control the award confers the right to purchase or receive, for each Share subject to the Option, SAR, Restricted Stock Award, Restricted Stock Unit Award, or Other Stock-Based Award immediately prior to the Change of Control, the consideration (whether stock, cash or other securities or property) received in the transaction constituting a Change of Control by holders of Shares for each Share held on the effective date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the transaction constituting a Change of Control is not solely common stock of the successor company, the Committee may, with the consent of the successor company, provide that the consideration to be received upon the exercise or vesting of an Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award, or Other Stock-Based Award, for each Share subject thereto, will be solely common stock of the successor company substantially equal in fair market value to the per share consideration received by holders of Shares in the transaction constituting a Change of Control. The determination of such substantial equality of value of consideration shall be made by the Committee in its sole discretion and its determination shall be conclusive and binding. Notwithstanding the foregoing, unless the applicable Award Agreement expressly provides that the provisions of this sentence shall not apply to the Award, in the event of an involuntary termination of a Participant’s employment without Cause by such successor company within 24 months of the date of a Change of Control, each Award held by such Participant at the time of the Change of Control shall be accelerated as described in Section 10.1. For the purposes of this Section 10.3, if “Cause” has not been defined in any applicable Award Agreement, “Cause” shall mean (i) an act of fraud or personal dishonesty undertaken by a Participant in connection with the Participant’s responsibilities as an employee that is intended to result in substantial gain or personal enrichment of the Participant at the expense of the Company, (ii) a Participant’s conviction of, or plea of nolo contendere to, a felony, (iii) a Participant’s gross misconduct in connection with the performance or failure of performance of a material component of the Participant’s responsibilities as an employee that is materially injurious to the Company, or (iv) a Participant’s continued substantial violations of his or her employment duties after the Participant has received a written demand for performance from the Company which specifically sets forth the factual basis for the Company’s belief that the Participant has not substantially performed such duties.

10.4 Deferrals. The Committee may permit a Participant to defer receipt of the payment of cash or the delivery of Shares that otherwise would be due to such Participant under an Award. Any such deferral elections shall be subject to such rules and procedures as shall be determined by the Committee.

10.5 No Effect on Employment or Service. Nothing in the Plan shall interfere with or limit in any way the right of the Company or a Subsidiary to terminate any Participant’s employment or service at any time, with or without cause, subject to compliance with local law. For purposes of the Plan, transfer of employment of a Participant between the Company and any one of its Subsidiaries (or between Subsidiaries) shall not be deemed a Termination of Service.

10.6 Cancellation and Rescission of Awards. The following provisions of this Section 10.6 shall apply to Awards granted to individuals who are, were or become Section 16 Persons. The Committee or the Board may, in

 

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its sole and absolute discretion, cancel, rescind, forfeit, suspend or otherwise limit or restrict any unexpired Award at any time if the Section 16 Person engages in “Detrimental Activity” (as defined below). Furthermore, in the event a Section 16 Person engages in Detrimental Activity at any time prior to or during the six months after any exercise of an Award, lapse of a restriction under an Award or delivery of Common Stock pursuant to an Award, such exercise, lapse or delivery may be rescinded until the later of (i) two years after such exercise, lapse or delivery or (ii) two years after such Detrimental Activity. Upon such rescission, the Company at its sole option may require the Section 16 Person to (i) deliver and transfer to the Company the shares of Stock received by the Section 16 Person upon such exercise, lapse or delivery, (ii) pay to the Company an amount equal to any realized gain received by the Section 16 Person from such exercise, lapse or delivery, (iii) pay to the Company an amount equal to the market price (as of the exercise, lapse or delivery date) of the Stock acquired upon such exercise, lapse or delivery minus the respective price paid upon exercise, lapse or delivery, if applicable or (iv) pay the Company an amount equal to any cash awarded with respect to an Award. The Company shall be entitled to set-off any such amount owed to the Company against any amount owed to the Section 16 Person by the Company. As used in this Section 10.6, “Detrimental Activity” shall include: (i) the failure to comply with any term set forth in the Company’s Employment Agreement; (ii) any activity that results in termination of the Section 16 Officer’s employment for Cause; (iii) the Section 16 Person being convicted of, or entering a guilty plea with respect to a crime connected with the Company; or (iv) the filing (or a determination that a filing is required) of a Material Negative Restatement (as defined below) of a Company financial statement that was filed with the U.S. Securities and Exchange Commission and such financial statement, as originally filed, is one of the Company’s three (3) most recently filed annual financial statements preceding the date a Performance Goal relating to a specific Award is deemed met by the Committee. A “Material Negative Restatement” is an adjustment to the Company’s relevant financial statement which (i) would reduce both GAAP and non-GAAP revenue, income and earnings per share or would increase both GAAP and non-GAAP expenses resulting in a reduction in both income and earnings per share; (ii) is as a result of an intentional, willful or negligent act of any employee of the Company; and (iii) is not the result of a change in any applicable law, rule, regulation, pronouncement, accounting practice or procedure.

10.7 Participation. No Employee or Consultant shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.

10.8 Successors. All obligations of the Company under the Plan, with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business or assets of the Company.

10.9 Beneficiary Designations. If permitted by the Committee, a Participant under the Plan may name a beneficiary or beneficiaries to whom any vested but unpaid Award shall be paid in the event of the Participant’s death. Each such designation shall revoke all prior designations by the Participant and shall be effective only if given in a form and manner acceptable to the Committee. In the absence of any such designation, any vested benefits remaining unpaid at the Participant’s death shall be paid to the Participant’s estate and, subject to the terms of the Plan and of the applicable Award Agreement, any unexercised vested Award may be exercised by the administrator or executor of the Participant’s estate.

10.10 Limited Transferability of Awards. No Award granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will, by the laws of descent and distribution, to a Participant’s spouse, former spouse or dependent pursuant to a court-approved domestic relations order which relates to the provision of child support, alimony payments or marital property rights or to the limited extent provided in this Section 10.10. All rights with respect to an Award granted to a Participant shall be available during his or her lifetime only to the Participant. Notwithstanding the foregoing, the Participant may, in a manner specified by the Committee, if the Committee so permits, transfer an Award by bona fide gift and not for any consideration, to (i) a member or members of the Participant’s immediate family, (ii) a trust established for the exclusive benefit of the Participant and/or member(s) of the Participant’s immediate family,

 

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(iii) a partnership, limited liability company or other entity whose only partners or members are the Participant and/or member(s) of the Participant’s immediate family, or (iv) a foundation in which the Participant and/or member(s) of the Participant’s immediate family control the management of the foundation’s assets. Any such transfer shall be made in accordance with such procedures as the Committee may specify from time to time.

10.11 No Rights as Stockholder. Except to the limited extent provided in Sections 7.4 and 7.5, no Participant (nor any beneficiary) shall have any of the rights or privileges of a stockholder of the Company with respect to any Shares issuable pursuant to an Award (or exercise thereof), unless and until certificates representing such Shares shall have been issued, recorded on the records of the Company or its transfer agents or registrars, and delivered to the Participant (or beneficiary).

10.12 Leaves of Absence. Unless otherwise expressly determined by the Committee or required by applicable law, vesting of Awards and/or any Shares issuable pursuant to an Award (or exercise thereof), will be treated as follows during a leave of absence of a Participant:

10.12.1 Statutory Leave of Absence. Vesting credit will continue during a leave of absence if the leave satisfies each of the following requirements: (a) the leave is approved by the Company, (b) the leave is mandated by applicable law, and (c) the Participant takes the leave in accordance with such law and complies with applicable Company leave policies (a leave meeting all such requirements being a “Statutory Leave of Absence”).

10.12.2 Approved Personal Leave of Absence. Vesting credit will not continue (and instead will be tolled or suspended) during any leave of absence that is not a Statutory Leave of Absence (a “Personal Leave of Absence”). For purposes of clarification, a Participant will not be considered to have incurred a Termination of Service during any Company-approved Personal Leave of Absence so long as the Participant complies with applicable law and applicable Company leave policies.

10.13 Limitations on Non-Employee Directors Awards.

10.13.1 Cash-Settled Awards. No Non-Employee Director may be granted, in any fiscal year of the Company, cash-settled Awards with a grant date fair value (determined in accordance with GAAP) of more than $750,000, increased to $1,000,000 in connection with his or her initial service.

10.13.2 Stock-Settled Awards. No Non-Employee Director may be granted, in any fiscal year of the Company, stock-settled Awards with a grant date fair value (determined in accordance with U.S. generally accepted accounting principles) of more than $750,000, increased to $1,000,000 in connection with his or her initial service.

SECTION 11

AMENDMENT, TERMINATION, AND DURATION

11.1 Amendment, Suspension, or Termination. The Board may amend, suspend or terminate the Plan, or any part thereof, at any time and for any reason. The amendment, suspension, or termination of the Plan shall not, without the consent of the Participant, alter or impair any rights or obligations under any Award theretofore granted to such Participant. No Award may be granted during any period of suspension or after termination of the Plan.

11.2 Duration of the Plan. The Plan shall be effective as of August 1, 2008, and, subject to Section 11.1, shall remain in effect thereafter. However, without further stockholder approval, no Incentive Stock Option may be granted under the Plan after February 26, 2020.

 

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SECTION 12

TAX WITHHOLDING

12.1 Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof), the Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, national, foreign, state, and local taxes (including the Participant’s FICA, income tax, national insurance, social insurance, payment on account, payroll taxes or other tax-related withholding or similar insurance or tax obligations) required to be withheld with respect to such Award (or exercise thereof).

12.2 Withholding Arrangements. The Committee, pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy his or her Tax Obligations, in whole or in part by (a) electing to have the Company withhold otherwise deliverable Shares, or (b) delivering to the Company already-owned Shares having a Fair Market Value equal to the amount required to be withheld or remitted. The amount of the Tax Obligations shall be deemed to include any amount which the Committee agrees may be withheld at the time the election is made, not to exceed the amount determined by using the maximum federal, state or local marginal income tax rates applicable to the Participant or the Company, as applicable, with respect to the Award on the date that the amount of tax or social insurance liability to be withheld or remitted is to be determined. The Fair Market Value of the Shares to be withheld or delivered shall be determined as of the date that the Tax Obligations are required to be withheld or remitted, or (c) by any other procedures set forth in the applicable Award Agreement.

SECTION 13

LEGAL CONSTRUCTION

13.1 Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural.

13.2 Severability. In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

13.3 Requirements of Law. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required.

13.4 Securities Law Compliance. With respect to Section 16 Persons, transactions under this Plan are intended to qualify for the exemption provided by Rule 16b-3. To the extent any provision of the Plan, Award Agreement or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable or appropriate by the Committee.

13.5 Code Section 409A. Unless otherwise specifically determined by the Committee, the Committee shall comply with Code Section 409A in establishing the rules and procedures applicable to deferrals in accordance with Section 10.4 and taking or permitting such other actions under the terms of the Plan that otherwise would result in a deferral of compensation subject to Code Section 409A.

13.6 Governing Law. The Plan and all Award Agreements shall be construed in accordance with and governed by the laws of the State of Delaware (with the exception of its conflict of laws provisions).

13.7 Captions. Captions are provided herein for convenience only, and shall not serve as a basis for interpretation or construction of the Plan.

 

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TIBCO Software Inc.

 

       
   

IMPORTANT ANNUAL MEETING INFORMATION 

       
         

 

Electronic Voting Instructions

         

Available 24 hours a day, 7 days a week!

         

Instead of mailing your proxy, you may choose one of the voting

         

methods outlined below to vote your proxy.

         

VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.

         

Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Central Time, on April 3, 2014.

         

 

   LOGO

 

    Vote by Internet

           

        •  Go to www.investorvote.com/TIBX

           

        •  Or scan the QR code with your smartphone

           

        •  Follow the steps outlined on the secure website

           

    Vote by telephone

           

        •  Call toll free 1-800-652-VOTE (8683) within the

           USA, US territories & Canada on a touch tone

           telephone

 

Using a black ink pen, mark your votes with an X as shown in
this example. Please do not write outside the designated areas.

 

x

     

        •   Follow the instructions provided by the recorded message

 

 

Annual Meeting Proxy Card

 

 

q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q

 

 

  A 

 

Proposals


 

 

The Board of Directors unanimously recommends a vote “FOR” the listed nominees and “FOR” each of Proposal 2, Proposal 3 and Proposal 4.

     

1.   Election of these director nominees, each to serve until TIBCO Software Inc.’s next annual meeting of stockholders or until their successors are duly elected and qualified.

  

+

      Director nominees:

   For    Withhold       For    Withhold       For    Withhold   

      01 - Vivek Y. Ranadivé

   ¨    ¨   

02 - Nanci E. Caldwell

   ¨    ¨   

03 - Eric C.W. Dunn

   ¨    ¨   

      04 - Peter J. Job

   ¨    ¨   

05 - David J. West

   ¨    ¨   

06 - Philip K. Wood

   ¨    ¨   

 

     For    Against    Abstain         For    Against    Abstain

2.    Approval of Amendment and Restatement to TIBCO Software Inc.’s 2008 Equity Incentive Plan.

   ¨    ¨    ¨   

3.   Advisory vote on executive compensation.

   ¨    ¨    ¨

4.   Ratification of the appointment of PricewaterhouseCoopers LLP as TIBCO Software Inc.’s independent auditors for the fiscal year ending November 30, 2014.

   ¨    ¨    ¨   

In their discretion, the Proxies are authorized to vote or otherwise represent the shares on any and all such other business that may properly come before the meeting or any postponement or adjournment thereof.

 

  B 

 

Non-Voting Items

Change of Address — Please print new address below.

 

  

 

 

  C 

 

Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below

Please sign exactly as your name appears on your stock certificate. If the stock is held by joint tenants or as community property, both holders must sign. Executors, administrators, trustees, guardians, attorneys and corporate officers should insert their titles.

 

Date (mm/dd/yyyy) — Please print date below.

 

Signature 1 — Please keep signature within the box.

 

Signature 2 — Please keep signature within the box.

    /    /              
         

¢

    

1  U P X

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q IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q

 

 

 

 

 

 

Proxy — TIBCO Software Inc.

 

PROXY FOR 2014 ANNUAL MEETING OF STOCKHOLDERS

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned stockholder of TIBCO Software Inc., a Delaware corporation, hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement, dated March 3, 2014, and hereby appoints Vivek Y. Ranadivé and Matthew D. Langdon, and each of them, proxies, with full power of substitution, to represent the undersigned and to vote as designated on the reverse side all shares of common stock of TIBCO Software Inc. that the undersigned is entitled to vote at the 2014 Annual Meeting of Stockholders of TIBCO Software Inc. to be held on April 3, 2014 at 10:00 a.m., Pacific time, at the headquarters of TIBCO Software Inc. located at 3303 Hillview Avenue, Palo Alto, CA 94304, and at any adjournment or postponement thereof.

THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS INDICATED, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED “FOR” EACH OF THE NOMINEES LISTED ON THE REVERSE SIDE HEREOF IN PROPOSAL 1 FOR THE BOARD OF DIRECTORS, “FOR” EACH OF PROPOSALS 2, 3 AND 4, AND FOR SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AS THE PROXIES DEEM ADVISABLE.

 

SEE REVERSE SIDE

   CONTINUED AND TO BE SIGNED ON REVERSE SIDE   

SEE REVERSE SIDE